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 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, or multiple entry consolidated group, and used by the group's head company:
- losses (including foreign losses)
- franking credits
- excess foreign tax credits
- attribution account surpluses, and
- attribution tax account surpluses.