Welcome To Workpaper.
Welcome To Workpaper.
Many businesses focus only on the numbers inside one company.
That is where reporting mistakes begin.
In Australia, connected entities can affect:
A business may look “small” on its own, but once related entities are included, the overall group position can change significantly.
This is why understanding connected entities is critical for accurate company reporting and compliance.
A connected entity is generally a business or entity that is linked through:
Connected entities may include:
The ATO often reviews the broader business group — not just one standalone company.
Many Australian tax and reporting rules do not apply at the single-company level only.
The ATO may require businesses to consider:
Ignoring connected entities can lead to:
1️⃣ Company Tax Rates
One of the biggest areas affected is the Base Rate Entity rules.
A company may think it qualifies for the 25% company tax rate because its own turnover is below $50 million.
However, connected entities may also need to be included in aggregated turnover calculations.
Example:
Combined turnover = $55 million
👉 The company may lose access to the lower tax rate.
2️⃣ GST and BAS Reporting
Connected entities often share:
Poor documentation between related entities can create:
Clear recordkeeping becomes extremely important.
3️⃣ Payroll and STP Reporting
Many business groups operate across multiple entities.
This can affect:
Where entities share workers or management functions, reporting mistakes can occur if systems are not properly coordinated.
4️⃣ ATO Compliance Reviews
The ATO closely reviews business groups where:
The ATO now uses sophisticated data-matching systems to identify reporting inconsistencies across related businesses.
❌ Treating Each Company Separately
Owners often ignore the wider business structure.
❌ Poor Inter-Entity Recordkeeping
Internal transactions are not properly documented.
❌ Incorrect Turnover Calculations
Businesses forget to include connected entities.
❌ Mixing Personal and Business Transactions
This creates reconciliation and compliance problems.
❌ Inconsistent Bookkeeping Across Entities
Different systems and reporting methods create confusion during year-end reviews.
Strong bookkeeping systems help businesses:
The more entities involved, the more important proper financial reporting becomes.
✔ Review the Entire Business Structure
Do not only look at one trading company.
✔ Keep Separate Records for Each Entity
Avoid mixing transactions.
✔ Document Related-Party Transactions Properly
Maintain invoices and agreements where required.
✔ Reconcile Accounts Regularly
Especially where multiple entities share expenses or staff.
✔ Review Aggregated Turnover Annually
This is critical for company tax rate eligibility and other compliance obligations.
Many connected entity issues are only discovered:
Fixing problems later often creates:
Early review is always easier and cheaper.
As businesses expand, structures often become more complex.
New entities may be added for:
Without proper systems, reporting can quickly become inconsistent across the group.
That is why many growing businesses require stronger bookkeeping and reporting processes as the structure expands.
At Workpaper
we help businesses and accounting firms maintain accurate bookkeeping, reporting, and compliance support across multiple entities.
We assist with:
✔ Multi-entity bookkeeping support
✔ BAS preparation support
✔ Reporting reconciliations
✔ Inter-entity transaction tracking
✔ Payroll reporting support
✔ Financial record organisation
✔ Year-end bookkeeping cleanup
📞 0485 825 915
📍 7 Bridge St, Werribee, Victoria 3030 Australia
Workpaper Solutions Pty Ltd
WORKPAPER Is A Valuable Service Provider With An Endeavor To Offer Cost-Effective High-End Quality Solutions.
