The Unthinkable Policy Option? Key Design Issues Under a System of Full Consolidation

42 Pages Posted: 7 Oct 2011 Last revised: 22 Mar 2012

Date Written: September 21, 2011


In 2010, Canada’s Department of Finance initiated a consultation process to consider the possible introduction of a formal corporate group taxation system. A principal focus of the consultation process has been the type of group taxation system that would be best for Canada. The two most common alternatives that have been adopted in other countries are the loss transfer and full consolidation systems. The choice between these two systems is a difficult one. Nevertheless, provincial interest in a full consolidation regime is evident, especially as a means to address the interprovincial allocation issue.

The purpose of this article is to provide an in-depth comparative analysis of the consolidation regimes adopted in eight countries: Australia, France, Italy, Japan, the Netherlands, New Zealand, Spain, and the United States. These are the countries that, by the end of 2009, had introduced full consolidation regimes providing for both intragroup loss offsets and tax-free asset transfers. The article critically compares the alternative policy options with respect to the design features and key structural elements of the eight selected consolidation regimes in an attempt to identify a model regime or template that might serve as a starting point for a Canadian system. In response to concern about the perceived complexity of a consolidation regime, the article ranks the eight consolidation regimes by applying a complexity index. This exercise is designed to highlight two aspects of the issue: first, the eight regimes represent a spectrum of varying degrees of complexity, indicating that a consolidation regime need not be as complex as the Australian and US models; and second, the complexity of a regime depends to a large extent on the policy choices with respect to the key structural elements.

Suggested Citation

Ting, Antony, The Unthinkable Policy Option? Key Design Issues Under a System of Full Consolidation (September 21, 2011). Canadian Tax Journal, Vol. 59, No. 3, pp. 421-462, 2011, Available at SSRN:

Antony Ting (Contact Author)

University of Sydney ( email )

Building H69 Codrington Street
Sydney, NSW 2006

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