• Consolidated or multiple entry consolidated (MEC) groups

    If you are the head company of a consolidated group or MEC group, your subsidiary members are treated as part of you (the head company) while they are part of the consolidated or MEC group for income tax purposes. Therefore, the R&D tax incentive applies to your consolidated group or MEC group as if it is a single entity.

    This is known as the single entity rule and it means that:

    • the actions and transactions of a subsidiary member are treated as having been undertaken by you, the head company
    • dealings that are solely between members of your consolidated or MEC group will not result in ordinary or statutory income or a deduction to you, the head company
    • expenditure a subsidiary member incurs on R&D activities is taken to be incurred by you, the head company
    • R&D activities conducted for your subsidiary member by a third party are taken to have been conducted for you, the head company
    • R&D activities conducted by your subsidiary member for another member of the same group (or vice versa) are taken to have been conducted for you, the head company
    • you (and not your subsidiary member) may be entitled to the R&D tax incentive for expenditure on R&D activities undertaken by a subsidiary member while it was in your consolidated or MEC group.
    Attention

    Registration if you are the head company of a consolidated or MEC group

    You must register your own R&D activities undertaken as well as those undertaken by subsidiary members of your consolidated or MEC group while they were part of your consolidated or MEC group. It is not necessary for subsidiary members to also register if they were members of your consolidated or MEC group for the full income year.

    End of attention

    If you are a subsidiary member:

    • that joined a consolidated or MEC group during the income year, you may be entitled to claim the R&D tax incentive for expenditure incurred on R&D activities undertaken in the period before joining the group.
    • for only part of the income year because you left that group during the year, you may be entitled to claim the R&D tax incentive for expenditure incurred on R&D activities undertaken in the period after you left the consolidated or MEC group.
    Attention

    Registration if you are a subsidiary member of a consolidated or MEC group for only part of the income year

    In order to qualify for the R&D tax incentive for R&D activities undertaken while you were not part of a consolidated or MEC group, you must register your R&D activities undertaken in the period that you were not a member of that group.

    End of attention

    Find out more

    For more information on registration, go to R&D Tax Incentive - RegistrationExternal Link on the AusIndustry website.

    End of find out more
      Last modified: 25 Oct 2016QC 26121