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Chapter 6 Consolidation (consolidated income tax treatment for groups of entities)

Last updated 25 May 2016

This chapter provides a summary of the provisions that relate to the application of income attributed from CFCs and included in the assessable income of a head company of a consolidated group. For detailed information on the operation of consolidation, see Consolidation.


For income tax purposes, consolidation is the taxing of a wholly owned group of entities as a single entity. Consolidation is optional. However, if the head company of a wholly owned resident group decides to consolidate, all its wholly owned eligible Australian resident group entities must become members of that consolidated group.

The choice to consolidate is irrevocable; once a group has consolidated, it is treated as a single entity for income tax purposes.

Where a foreign company, either directly or through its wholly owned foreign group, has multiple entry points of investment into Australia through Australian resident companies, special multiple entry consolidated (MEC) group rules apply to enable eligible wholly owned resident companies and their eligible wholly owned resident subsidiary entities to consolidate.

The following losses and tax attributes can generally be brought into a consolidated group or MEC group, and be used by the group's head company:

  • losses
  • franking credits
  • CFC attribution account surpluses
  • post-FIF abolition surpluses.