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Document the services traded between your entities

We document what your entities actually provide each other, so the deductions survive a question.

Groups share staff, premises and services between entities every day, and the paperwork rarely keeps up. Agreements expire. The amounts charged change and the document does not. If the ATO asks why an inter-entity payment is deductible, the answer has to be a current agreement that matches what actually happens.

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Protect your deductions

The written arrangement matches what the entities actually do, which is what the deduction rests on.

Register your security

Where one entity supplies another on credit, a PPSR registration keeps it from ranking as an unsecured creditor.

Reduce ATO risk

Current agreements and consistent fee schedules remove the inconsistencies a review would otherwise pick up.

What an inter-entity services agreement has to prove

An inter-entity services agreement is a contract between related entities in the same group. Usually it records that one entity provides staff, premises, management or other services to another, and what the second pays for them.

Its real function is evidentiary. A deduction under the Income Tax Assessment Act 1997 (Cth) requires the payment to be incurred in gaining assessable income. For entities under common control, that is not self-evident. The agreement is what shows genuine mutual obligations rather than an internal transfer of cash.

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Why does an agreement matter for an inter-entity deduction?

A deduction under the Income Tax Assessment Act 1997 (Cth) requires the payment to be incurred in gaining assessable income. Between related entities that is not self-evident. A current agreement showing genuine mutual obligations and a commercial basis for the fee is the evidence. It shows the payment is what it says it is.

Our agreement has expired. Does that matter?

Yes. An expired agreement is not evidence of a current obligation, and relying on an implied continuation is a weak position if the deduction is reviewed. Renewing it now is straightforward. Arguing about it later is not.

What is the PPSR and why is it relevant here?

The Personal Property Securities Register is the national register of security interests in personal property. Where one entity in a group provides services or assets to another on credit, registering protects that entity if the other becomes insolvent. Without registration the claim ranks with the unsecured creditors.

How often should these agreements be reviewed?

At least annually, and whenever the services, the fees or the group structure change. Most of the risk comes from drift rather than from a decision, so a scheduled review is what prevents it.

The agreement is the evidence the arrangement is commercial

Current documentation that matches what the entities actually do is what stands behind every inter-entity deduction the group claims.

An expired agreement is not a paperwork problem

Most groups set up their inter-entity arrangements properly and then let the documents drift. The agreement runs out and nobody renews it. The management fee goes up and the schedule still shows the old number. The services change and the contract does not.

The payments keep being deducted the whole time. Nothing looks wrong from the inside, which is why it is usually an adviser who notices rather than you.

We will review your existing inter-entity arrangements and the documents behind them.
We will draft updated service agreements between the related entities.
We will advise on the commercial terms needed to support deductibility.
We will advise on and register PPSR security interests where one entity supplies on credit.
We will recommend a review schedule so the documents stay current.

When your accountant raises it and nobody has looked in years

Your accountant has flagged that the inter-entity agreements are out of date, inconsistent with what is actually being charged, or expired altogether. They are worried the deductions for inter-entity payments could be challenged. Nothing has happened yet. This is the window in which fixing it is straightforward rather than defensive.

What's included in your inter-entity agreement service

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Review of existing inter-entity arrangements and documentation.
Inter-entity services agreement drafting or updating.
PPSR security interest advice and registration.
Documentation to support the deductibility of inter-entity payments.
A recommended review schedule.

The deduction is tested years after the document expired

An ATO review does not arrive in the year the agreement lapsed. It arrives later, and asks about payments made across several years, on an arrangement whose paperwork stopped matching reality some time ago.

By then the questions are harder than they need to be. Why did the fee change. What obligations did the receiving entity actually have. If the answers rest on an expired document and an inconsistent schedule, the deduction is exposed. So are the penalties and interest that follow a shortfall. The original fix was a few hours of work.

From drifted paperwork to a record that matches the group

We start by reading what is actually in place against what the entities actually do. The gaps are usually specific and easy to state. An expired term, a fee that moved, a service that was never documented.

We then prepare agreements that record the real arrangement, with mutual obligations that are genuine rather than recited. Where one entity supplies on credit, we register a security interest on the PPSR so that entity is not left unsecured if the other fails. Finally we set a review point, because this is a problem that returns if nobody owns it.

How the documentation gets rebuilt

From drifted paperwork to a current, consistent record.

Read the arrangement

We compare the existing agreements with what the entities actually provide each other and identify the gaps.

Document and register

We prepare agreements that record the real arrangement and register PPSR security interests where one entity supplies on credit.

Set a review point

We recommend a review schedule so the documents stay consistent with the group as it changes.

Inter-entity agreements documented to support the deduction

Keeping group documentation current is never the most urgent thing on a Monday. It is also the sort of task that produces no visible benefit until the year it saves you a great deal of money.

We document inter-entity arrangements so the written record matches what the entities actually do for each other. One of our lawyers is a Chartered Tax Advisor with The Tax Institute and has held that credential for 25 years. Where one entity is effectively extending credit to another, we also register the security interest, which is the part most groups miss.

Our great lawyer guarantee

Six principles we hold to, whatever you bring us and however long it takes.

Take the time

We listen carefully to understand what you want to achieve, then step you through the advice and the documents.

Share our knowledge

We pass on as much as we can, so you can make your own informed decisions.

Stick to our knitting

We only do what we are good at, so you never pay for our learning.

Work as one team

Someone is always available to answer your question or point you the right way.

Fair pricing

A fixed or capped quote for advice and documents, so you do not carry the price risk.

It is your show

We are in it for a front row seat to witness your success, not for our egos.

Fix the documentation before it is the subject of a question

This is much easier to put right before anyone asks about it. Send us the current agreements and a summary of what the entities actually provide each other. We will tell you where the gaps are and what it takes to close them.

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