Under consolidation, only the head company can operate attribution accounts for the purposes of the CFC measures.
Subsidiary members transfer the pre-consolidation balances of their attribution accounts to the head company, on formation or when the entity joins the consolidated group or multiple entry consolidated group, to facilitate its use of any pre-consolidation surpluses during consolidation.
The attribution account surpluses are transferred to the head company so that, to the extent that income had previously been attributed to the member entity, subsequent distributions of income from an attribution entity – for example, a CFC, that had previously been attributed to the member entity – are not assessed to the head company. Once the account balances have been transferred to the head company of a consolidated group, the attribution accounts of subsidiary members become inoperative during the period the entity is a member of the consolidated group or multiple entry consolidated group.
When an entity with an interest in a CFC leaves a group, a proportion of the attribution account surpluses that the head company has in relation to the interests in the CFC that leave the group with the leaving company will be transferred to the leaving entity.