Under Australia’s tax regime, entities under 100% common ownership can be grouped for tax
to as a “tax consolidated group”).
The head company of a tax consolidated group is principally liable for the income tax liabilities of the
group and lodges a single tax return for the group.
However, under the tax legislation, each subsidiary in the group is jointly and severally liable for the
entire group tax liability in the event that the head company defaults in paying that liability (unless the
group has entered into a valid tax sharing agreement).
In addition, tax funding agreements outline how the head company will fund the payment of tax liabilities,
make and receive payments for certain tax attributes and account for tax consolidation.