No, they don't form into divisions, I read this thread soo long ago:
Here is the official reason:
Because we prefer to focus on the war in the "Pacific" aspect of the game. Australia's operational space does not require 'Divisions'. Australian divisions were constantly changing; they might have 2, 3 or 4 brigades under command, and an equally variable amount of arty, so how to deal with that? We just gave some DivHQs and a bunch of brigades that can come and go as they please. This is a much more flexible arrangement for Australia's wartime tasks; both at home, and in her 'out-deployed' operational area.
Used correctly, a DivHQ, 3 brigades and integral Div Arty Bns will stand up to a 'division' stack. The 'a div beats 3 rgts every time' stuff is urban legend and simply not true. Michaelm has been very good about tweaking the combat algorithm and casualty calculations, to make them more adaptively realistic. Mathematically valid statistical analysis shows a 3% differential in casualty rates between a fully formed division and a division consisting of constituent units, when the aggregates are rationally related. Given the code algorithm, this is exactly what would be expected, mathematically.
Since there is simply no difference, why not let Aus/NZ retain the operational flexibility they actually enjoyed?
In our scenarios, TOE upgrades are tagged to the highest echelon level of a unit's "parent". Where Br/Rgt is highest echelon for an LCU, TOE upgrades happen with respect to those particular echelons. The changing configurations of individual brigade structures is another reason we chose to represent Australian forces in this manner.