Consolidated groups and MEC groups

The head company of a consolidated group or MEC group can be classified as any of the following:

  • a non-ADI outward investing entity
  • a non-ADI inward investing entity
  • an ADI outward investing entity
  • an ADI inward investing entity.

However, the thin capitalisation rules will not apply where the consolidated group or MEC group passes either the:

There is a further exemption relating to a head company that is either a foreign controlled ADI or a foreign controlled Australian company that wholly owns a foreign controlled Australian ADI. This is discussed in more detail in Exemptions for foreign controlled consolidated groups.

How the head company is classified is determined by the nature of the entities making up the consolidated group or MEC group. Entity categories explains how individual entities are classified. If the consolidated group or MEC group contains a special purpose entity that is exempt from thin capitalisation under section 820-39 of the ITAA 1997, it is treated as not being part of that group for thin capitalisation purposes only.

This provides further information on:

See also:

Last modified: 09 Mar 2016QC 48184