The definitions are broader than many owners expect and include individuals as well as companies.
Related parties
Entities under common ownership or control, and those where one party can exercise significant influence over the other, are related parties.
Connected persons
Owners, directors and their relatives, along with entities they control, may be connected persons. Payments to them, such as salaries and loans, can be scrutinised.
Why it matters
Excessive payments to connected persons may be non-deductible. Pricing at market rates and documenting it avoids disputes.
Key takeaways
- Map owners and directors to transactions
- Charge market rates for loans and services
- Document agreements in writing
Need help applying this to your business? Our specialists can review your situation and give a clear, fixed-fee plan.