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Consolidated groups and MEC groups

The head of a tax group can be either an outward or inward investing financial entity, ADI or a general class investor.

Last updated 8 March 2016

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:

Explains when the outward investing entity (non-ADI) rules apply to the group.

Explains the grouping branches of foreign banks and financial entities for thin capitalisation purposes only.

Rules for consolidated or MEC groups, ADI or a single company incorporating an established Australian branch.

A debt deduction is not disallowed under the thin capitalisation rules where a head company meets certain conditions.

Explains the treatment if classified as an outward investing ADI.

Explains the treatment if classified as an inward investing ADI.

How to calculate the value of a consolidated or single company’s assets and liabilities including part year periods.

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