For an entity to be eligible as a head company of a consolidated group, the entity must:
Be an Australian resident company
Have some of its income taxed at the general company tax rate
Not be a subsidiary member of another group that is eligible to consolidate
Not be an excluded entity - refer to Entity Classes for Tax Consolidation
The questionnaire addresses each of these criteria and assists in determining if the entity is eligible to be the head company of a consolidatable group.
Is the entity a company for the purposes of the ITAA 1997? (Y/N)
An entity must be a company to be eligible has the head company of a consolidated group. A Company for ITAA 1997 purposes can include:
Unincorporated club or association
Corporate limited partnership
Is the entity classed as any of the following? (N/A/B/C/D/E)
As set out in Entity Classes for Tax Consolidation the entity classes (A, B, C, D, E) are excluded, under subsection 703-20(2) of the ITAA 1997, from being a head company of a consolidated group.
Entity Class Description A An exempt entity The total ordinary and statutory income is exempt from income tax under Division 50. B A recognised medium credit union For the income year, defined by section 6H of the ITAA 1936. These credit unions have a threshold placed on their tax payable, even though they are subject to the corporate tax rate. C An approved credit union As defined by section 23G of the ITAA 1936 and is not a recognised medium or large credit union for the income year. D A pooled development fund (PDF) Defined under section 995-1 of the ITAA 1997 at the end of the income year, subject to a concessional rate of tax. E A film licensed investment company (FLIC) Defined under section 375-855 of the ITAA 1997. Tax losses or net capital losses cannot be transferred to or from these entities and they are prevented from claiming deductions for expenditure on a film where the amount spent is concessional capital.
Is a portion of the Entity's income taxed at the general company tax rate? (Y/N)
Is the Entity an Australian Resident for tax purposes? (Y/N)
Defined under section 995-1 (ITAA 1997) as Incorporated in Australia or if not incorporated in Australia, it carries on business in Australia and has either:
Its central management or control in Australia or
Its voting power controlled by shareholders who are residents of Australia
Is the Entity a prescribed dual resident? (Y/N)
Defined under subsection 6(1) of the ITAA 1936 and means:
A company that qualifies as an Australian resident but
Is treated as being a resident solely of another country under tie-breaker rules in a double tax agreement or
Qualifies as an Australian resident solely because its central management and control is in Australia and it carries on business here, but is also regarded as a resident of another country with its central management and control in another country.
Is the Entity a 'wholly-owned' subsidiary of another company that is eligible to be a head company of a consolidated group? (Y/N)
The other head company does not need to have to have formed a consolidated group, but needs only to be eligible to be the Head Company of a consolidated group.
There are three possible results to this questionnaire
This entity is eligible as a member of a consolidatable group
This entity may be eligible as a subsidiary of a consolidatable group
This entity is not eligible as a member of a consolidatable group
If Yes to Question 6, Are there any entities interposed between this entity and the eligible Head Company? Answer Yes or No.
If Yes to Question 7, are all the interposed entities subsidiary members of the group? Answer Yes or No.
If No to Question 8, are these subsidiary members excluded due to being:
Select from the drop-down:
A) An Interposed nominee or
B) An Interposed Foreign Resident Entity
Refer to Subsection 703-45(2), (3) and (4) ITAA 1997 for more information.