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  • Chapter 9: Consolidation (consolidated income tax treatment for groups of entities)



    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

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

    Once a group has consolidated the choice becomes irrevocable and the consolidated group is treated as a single entity for income tax purposes.

    If 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 will be applicable to the wholly owned resident companies and their wholly owned resident subsidiary entities that elect to consolidate as MECs.

    The following losses and tax attributes can generally be brought into a consolidated group (or MEC group) when the group forms or a subsidiary member joins the group, and used by the group's head company:

    • losses
    • franking credits, and
    • attribution account surpluses.

    Note: This chapter provides a summary of the provisions on the application of income attributed from FIFs and included in the assessable income of a head company of a consolidated group. Detailed information on the operation of consolidation is in the Consolidation reference manual, which provides information on the operation of consolidation, including its practical effects for business. The manual and legislation are available on our website.

    If you have tax technical queries, phone the Business Infoline on 13 24 78 or email us at

    Last modified: 04 Feb 2010QC 21777