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Under consolidation, only the head company can operate FIF attribution accounts for the purposes of avoiding double taxation where it receives a distribution or other attribution account payment from a FIF, or disposes of an interest in a FIF that it is taken to have held under the single entity rule in section 701-1 of the ITAA 1997.The pre-consolidation post FIF abolition surplus balances of the FIF attribution accounts of subsidiary members of the group are transferred to the head company (or MEC group) at formation or when a subsidiary member joins the consolidated group (or MEC group). This ensures that distributions from FIFs are not taxed to the head company where the joining entity has already been subject to FIF taxation.
Once the post FIF abolition surplus balances have been transferred to the head company of a consolidated group (or MEC group) the FIF attribution accounts of subsidiary members become inoperative during the period the entity is a member of the consolidated group (or MEC group).
When a company with an interest in a FIF leaves a group, a proportion of the head company's post FIF abolition surplus that the head company has in relation to the interests in the FIF that leaves the group with the leaving company are transferred to the leaving company.