• Eligibility

    The head company must:

    • be an Australian resident (but not a prescribed dual resident) company
    • not be a subsidiary member of a consolidated group or a group that is eligible to consolidate
    • have at least some of its taxable income (if any) taxed at the general company tax rate.

    A corporate unit trust or public trading trust that elects to be taxed like a company may be a head company.

    A subsidiary member must:

    • be a company, trust or partnership
    • be wholly owned (either directly or indirectly) by the head company (disregarding finance shares that are a debt interest and up to 1% of ordinary shares that meet certain employee share scheme requirements)
    • be an Australian resident (but not a prescribed dual resident)
    • have at least some of its taxable income (if any) taxed at the general company tax rate (if a company).

    Certain types of companies cannot be a head company or subsidiary member and certain types of trusts cannot be a subsidiary member. For example, superannuation funds generally cannot be a head company or subsidiary member.

    A foreign-owned group of Australian resident subsidiaries that does not have a single resident head company may instead choose to consolidate by forming a multiple entry consolidated (MEC) group.

    Figure 1

    Figure 1 - As wholly-owned subsidiaries of the head company, companies A and B are subsidiary members of a consolidatable group. Company C is not a member as it is not wholly owned (directly or indirectly) by the head company

    Figure 1 - As wholly-owned subsidiaries of the head company, companies A and B are subsidiary members of a consolidatable group. Company C is not a member as it is not wholly owned (directly or indirectly) by the head company.

    Last modified: 25 Feb 2016QC 48028