Two or more companies that are 100% owned by the same shareholders can become a consolidated group. This means they are treated as a single entity for tax purposes.
What consolidated companies can do
Consolidated groups of companies can:
- transfer assets within the consolidation group, with deferred income tax liabilities
- pay exempt dividends between companies
- claim deductions for administration and other costs of holding companies that may not be deductible to the holding company that incurred the expenditure
- use losses incurred by group members by referring to shareholding or business continuity requirements of the group, not of the individual member
- offset imputation credits within the group, even though ordinary imputation credit rules do not allow imputation credits to be grouped.
Leaving the consolidated group
A company can leave a consolidated group by notifying us.
They will no longer be treated as a member from the beginning of the income year we receive the notice in.
If the company requests it they can be treated as a non member for the income year after we receive their notice.
Companies can also stop being a member of a consolidated group when they:
- lose their eligibility status
- are no longer entitled to be a member of the same consolidated group
- belong to a consolidated group that stops having a nominated company (the company selected to file income tax returns on behalf of the group).