With income tax moving to our new tax system, we have changed how consolidated group information is viewed and managed. The income tax account for a consolidated group is now viewed and managed under the nominated company.
Read below to find out more about this change, as well as how it might affect you or your clients.
For more information on these changes, check out our Structure of consolidated groups diagram (PDF | 41.2kb).
A consolidated group is group of companies owned by the same shareholders to be treated as a single economic entity for tax purposes. A consolidated group only files one non-individual income tax return, which includes the income of all the companies in the group. It also simplifies offsetting losses and transferring assets among the companies.
We have changed how consolidated group information is viewed and managed. The income tax account for a consolidated group is now viewed and managed under the nominated company. That is, one company with its own IRD number that represents the consolidated group. The consolidated group will no longer appear under its own company.
In our old system, a customer couldn’t have more than one income tax account. This meant that when companies consolidated into a group, a new entity with a separate IRD number had to be created. Creating this new entity meant that its income tax obligations could be managed separately from those of its members.
In our new system, a customer can have more than one income tax account. This means that a new entity doesn’t need to be created for a consolidated group’s income tax obligations to be managed.
When we moved income tax to the new system each existing consolidated group income tax account was moved under the nominated company’s IRD number.
Going forward, instead of creating a new entity, a new profile type is created to track imputation and consolidated groups. On the profile, an indicator will indicate what type of group this is for. Importantly, the consolidated group’s income tax account will sit under the nominated company’s IRD number. The nominated company’s own income tax account will be suspended. For each profile, links will be created from the nominated company to the group’s members by the Owner of the nominated company’s income tax account.