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



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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. Detailed information on the operation of consolidation is contained in the Consolidation reference manual: see also More information on consolidation.


For income tax purposes, 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.
    Last modified: 28 Jun 2013QC 28180