Consolidation is optional. A group needs to determine its eligibility, analyse the costs and benefits of consolidating, and choose whether and when to consolidate. The choice to consolidate is irrevocable once it is made.
- Forming a consolidated group
Consolidating a group involves planning and implementing new systems and calculating a consolidated income tax position for the group as a whole.
Among other things, the head company needs to:
- determine asset values for joining subsidiaries
- transfer losses and calculate a utilisation rate
- transfer franking credits and foreign tax credits
- deal with the other tax attributes of the joining subsidiaries.
- Operating as a consolidated group
Operating as a consolidated group requires the head company to, among other things:
- make a choice to form a consolidated group with effect from a certain date
- notify the ATO of its choice to consolidate in the approved form within the prescribed time
- calculate, report and pay the group’s PAYG instalments
- determine, report and make any balancing adjustments to meet the group’s annual income tax liabilities
- manage any ongoing income tax liabilities and supply income tax information to the ATO when required, and manage the entry and exit of subsidiary members, including notifying the ATO.