Consolidation issues for financiers

The Australian income tax system has recently undergone perhaps its most significant structural change, with the introduction of the consolidation regime. This regime radically changes the way in which corporate groups are taxed and has an enormous impact on all businesses. Corporate groups that include entities that are in the business of banking or providing or raising finance ("Financiers") will be subject to the same changes as other corporate groups, but, given the nature of their business, additional issues will arise for Financiers. Financiers must consider the impact of consolidation on their own tax profile; as well as the impact of the consolidation regime on borrowers from members of the Financier consolidated group. In addition, the way in which the consolidation regime will affect transaction structures; the sale or acquisition of subsidiaries; and the creation and disposal of financial assets, must be carefully considered by Financier groups. The nature of the business of Financiers and the types of assets that Financier groups typically own or create (in an intra-group context and in their transactions with entities outside the Financier group) result in particular issues for these entities. This article outlines some of the major impacts of the consolidation regime on Financiers.