If you consolidate

If entities choose to consolidate, the thin capitalisation rules apply to the head company of the consolidated group or MEC group.

Once consolidated, the thin capitalisation rules then apply to the group as though it were a single company for the income year. Subject to certain conditions, the group can include wholly-owned resident companies, trusts and partnerships, and Australian bank branches of foreign banks.

There are additional special rules to deal with financing arrangements between associate entities that are not grouped.

For more information about grouping, see Consolidated groups and MEC groups.

Last modified: 09 Mar 2016QC 48139