• Consolidation for income tax purposes

    Wholly owned corporate groups may have the option of consolidating for income tax purposes. Consolidation is optional but irrevocable. The consolidated group operates as a single entity for income tax purposes, lodging a single income tax return and then paying a single set of PAYG instalments.

    When a group consolidates, it is a 'one in, all in' situation, in which all of the head company's eligible wholly-owned subsidiary members become part of the group.

    The following entities (which receive special tax treatment compared with ordinary Australian-resident companies) cannot be a head company or subsidiary member of a consolidated group:

    • exempt entities (that is, total ordinary and statutory income is exempt)
    • pooled development funds
    • film licensed investment companies
    • certain credit unions.

    Other entities specifically excluded from being a subsidiary member of a consolidated group are:

    • non-profit companies
    • trusts that are complying and non-complying superannuation entities
    • trusts that are non-complying approved deposit funds.

    While a non-profit company can be the head company of a consolidated group, it cannot be a subsidiary member.

    See also:

      Last modified: 23 Jun 2016QC 23099