INSIGHT · FINANCE & TAX RECORDS

Several building companies, one owner.
The size test counts down the chain,
not across it.

9 October 2026

Under section 45A of the Corporations Act 2001, a proprietary company is large for a financial year if it meets at least two of three tests, which the Corporations Regulations 2001 set at consolidated revenue of $50 million or more, consolidated gross assets of $25 million or more at year end, and 100 or more employees at year end, for the 2019-20 financial year and later. The tests count the company and the entities it controls. Companies that sit beside it under the same owner come back into view under AASB 124, as related parties.

Analysed 9 October 2026 · Corporations Act 2001 compilation No. 149 (compilation date 19 September 2026) · Corporations Regulations 2001 compilation No. 214 (1 September 2026) · compiled AASB 10 (prepared 10 March 2026), AASB 124 (prepared 6 April 2023), AASB 1053 (prepared 15 September 2022) and AASB 1060 (applies from 1 January 2025) · all pages read 9 October 2026.

Key takeaways

Two of three, at thresholds the Act does not print: Section 45A(3) prints $25 million of consolidated revenue, $12.5 million of consolidated gross assets and 50 employees. Regulation 1.0.02B prescribes $50 million, $25 million and 100 instead, and applies to the 2019-20 financial year and later financial years. A company meeting at least two is a large proprietary company for that financial year.
Each test includes the entities the company controls: Revenue, gross assets and employees are counted for "the company and the entities it controls (if any)". Whether the company controls an entity is decided in accordance with the accounting standards made for section 295(2)(b), which is where AASB 10 comes in.
Control is a three-part test, with a start date: AASB 10 says an investor controls an investee if and only if it has power over the investee, exposure or rights to variable returns, and the ability to use that power to affect those returns. Consolidation begins from the date control is obtained and ceases when it is lost.
Companies under a common owner are related parties: AASB 124 treats an entity controlled or jointly controlled by a person who controls the reporting entity as a related party, and requires the amount of related party transactions, outstanding balances, their terms and any guarantees to be disclosed. AASB 1060 names transactions between entities under the common control of a single person as a common example.
We would tag the counterparty when the invoice is raised: A system-design recommendation, not accounting advice: record which entity is on each side of every intercompany transaction, with a dated map of who controls whom, so elimination, related party disclosure and the year-end size test can be produced from records rather than rebuilt from bank statements.

The size test:
two of three, from 2019-20.

Section 45A sorts proprietary companies into small and large for each financial year. A company that satisfies at least two of the three paragraphs in subsection (3) is a large proprietary company. Each paragraph names a figure in the Act and then defers to "any other amount prescribed by the regulations". Regulation 1.0.02B prescribes those other amounts.

Regulation 1.0.02B was inserted by the Corporations Amendment (Proprietary Company Thresholds) Regulations 2019, which commenced on 1 July 2019, and regulation 10.30.01 applies it "in relation to the 2019-20 financial year and later financial years". The prescribed figures are twice those printed in the Act (our calculation). A threshold copied from the Act's text alone is the pre-2019-20 figure.

Test in s 45A(3)	Figure printed in the Act	Figure prescribed by reg 1.0.02B	When it is measured
Consolidated revenue of the company and the entities it controls	$25 million or more	$50 million	For the financial year
Value of consolidated gross assets of the company and the entities it controls	$12.5 million or more	$25 million	At the end of the financial year
Employees of the company and the entities it controls	50 or more	100	At the end of the financial year, part-time employees as an appropriate fraction of a full-time equivalent (s 45A(5))

"The entities it controls"
is an accounting question.

Section 45A(4) states that whether a proprietary company controls an entity "is to be decided in accordance with the accounting standards made for the purposes of paragraph 295(2)(b) (even if the standards do not otherwise apply to the company)". Subsection (6) adds that consolidated revenue and consolidated gross assets are calculated in accordance with the accounting standards in force at the relevant time. The control standard is AASB 10 Consolidated Financial Statements.

Three elements, all required: AASB 10 paragraph 7: an investor controls an investee if and only if it has power over the investee, exposure or rights to variable returns from its involvement with the investee, and the ability to use its power over the investee to affect the amount of its returns. Paragraph 8 requires the assessment to be repeated if facts and circumstances indicate a change to any of the three.
Control has a date: Paragraph 20: consolidation of an investee begins from the date the investor obtains control and ceases when the investor loses control. A group that adds a project company part-way through a year consolidates it from that date, not from the start of the year.
Intragroup amounts are eliminated in full: Paragraph B86(c): consolidated statements eliminate in full intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between entities of the group. Paragraph 19 requires uniform accounting policies for like transactions in similar circumstances.

Sister companies leave the size test
and come back as related parties.

Section 45A counts down the chain: the company and the entities it controls. Where the common owner is itself a company that controls the sister companies, they are entities it controls and count in its own test. Its text does not mention companies held beside it by the same owner. AASB 124 Related Party Disclosures looks across. A person who has control or joint control of the reporting entity is a related party, and so is any entity that person controls or jointly controls (paragraph 9(a)(i) and 9(b)(vi)). A close member of that person's family, defined to include a spouse or domestic partner and children, is treated the same way.

Paragraph 19 of AASB 124 requires the disclosures to be made separately for each category: the parent, entities with joint control or significant influence, subsidiaries, associates, joint ventures, key management personnel, and other related parties. Each intercompany balance therefore needs a category as well as an amount.

What has to be disclosed: Where there have been related party transactions, AASB 124 paragraph 18 requires, at a minimum, the amount of the transactions; the amount of outstanding balances, including commitments, with their terms and conditions, whether they are secured and details of any guarantees given or received; provisions for doubtful debts on those balances; and the bad or doubtful debts expense for the period.
Whether or not a price is charged: A related party transaction is "a transfer of resources, services or obligations between a reporting entity and a related party, regardless of whether a price is charged". Plant lent between companies, staff shared on one payroll and a guarantee given for a sister company's facility are all transfers that a record has to be able to show.
The Tier 2 standard says it in plain terms: AASB 1060, the Simplified Disclosures standard, lists as common examples transactions between an entity and its principal owners, and "transactions between an entity and another entity when both entities are under the common control of a single entity or person". Paragraph 198 sets the same minimum content: amounts, balances, terms, guarantees and doubtful debts.

What a large proprietary company
has to produce, and from what.

Section 292(1)(c) requires a financial report and a directors' report to be prepared for each financial year by all large proprietary companies. Under section 292(2), a small proprietary company has to prepare them only if directed under section 293 or 294, if it was controlled by a foreign company and not consolidated in statements lodged with ASIC, or if it has CSF shareholders.

Consolidated where the standards require it: Section 295(2)(b): if the accounting standards require the company to prepare financial statements in relation to a consolidated entity, the financial statements are those of the consolidated entity. AASB 10 paragraph 4 opens with "An entity that is a parent shall present consolidated financial statements", subject to exemptions it lists.
Two tiers, the same consolidation: AASB 1053 paragraph 13 applies Tier 2 (Simplified Disclosures) as a minimum to the general purpose financial statements of for-profit private sector entities that do not have public accountability. Paragraph 9 states that Tier 2 comprises the recognition and measurement requirements of Tier 1, including consolidation and the equity method, with substantially reduced disclosure requirements.
Records behind the report, kept for seven years: Section 286 requires written financial records that correctly record and explain transactions and would enable true and fair financial statements to be prepared and audited, retained for 7 years after the transactions covered by the records are completed.

Where a building group's records
usually fall short.

Residential building businesses are often run through several companies: one that contracts with clients, one that holds land or develops it, one that owns plant or employs staff, and project companies that come and go.

The gap shows up at year end. Eliminating intragroup amounts in full needs both sides of each transaction to agree. A related party note needs each balance with its terms, security and guarantees, sorted by category. The size test needs consolidated revenue, consolidated gross assets and a full-time-equivalent head count at the end of the year across the company and the entities it controls, on a control map that was true on that date.

The counterparty is not tagged: An invoice from the contracting company to the development company sits in two ledgers as an ordinary sale and an ordinary cost. Unless each side carries the other entity's identity, elimination and the related party note are reconstructed by hand.
The control map is not dated: Project companies are added and wound up during the year. AASB 10 consolidates from the date control is obtained, so a list of companies without dates cannot say which entity belonged in the count at year end.
Shared staff are counted twice or not at all: Section 45A(5) counts part-time employees as an appropriate fraction of a full-time equivalent. Where staff are employed by one company and work across several, the year-end count depends on which entities are in the controlled group, which is the dated map again.

What we would put in a system

Four fields, held at group level rather than in each company's ledger. They do not decide anything; they make the questions answerable from records.

Where agents help is narrow. An agent can read intercompany invoices, loan agreements and guarantee documents, propose the counterparty, the related party category and the terms, and draft the record, and a person confirms it. No agent decides whether one entity controls another, whether a company is large or small, or what a financial report must contain. Those are matters for the directors and the group's accountants and auditors.

Field	Why it is load-bearing
A dated control map	Who controls whom, from which date to which date, and on what basis. AASB 10 consolidates from the date control is obtained, and section 45A counts the entities a company controls at the relevant time.
Counterparty entity and related party category on every intercompany transaction	Lets intragroup amounts be eliminated in full and lets each balance be reported in the AASB 124 paragraph 19 category it belongs to, instead of being found at year end.
Terms, security and guarantees for each intercompany balance	AASB 124 paragraph 18 and AASB 1060 paragraph 198 both require terms and conditions, whether a balance is secured, and details of guarantees given or received.
A year-end size test snapshot	Consolidated revenue, consolidated gross assets and full-time-equivalent employees, stored with the threshold figures used and their source (regulation 1.0.02B, the compilation read and its date), so the result can be re-checked if the regulation changes.

Questions worth asking
of your own group

For a group finance lead: could you list, today, every company in the group with the date control began and, where relevant, ended?

AASB 10 consolidates an investee from the date control is obtained until the date it is lost. Without dates, the year-end consolidation and the section 45A count both rest on memory.

For a director of a builder that runs alongside a development company: is every invoice between them tagged with the other company's identity?

If both companies are controlled by the same person, AASB 124 treats them as related parties, and in financial statements that apply AASB 124 the note needs transaction amounts and balances. An untagged invoice reads as an ordinary sale in one ledger and an ordinary cost in the other.

For a bookkeeper: where are the guarantees recorded?

A guarantee given by one company for another's facility is a related party disclosure item under AASB 124 paragraph 18(b)(ii), where the two companies are related parties and the financial statements apply AASB 124. It often sits in a bank file, not in the ledger, and may never pass through the accounts.

For whoever runs the year-end size test: which threshold figures does the spreadsheet use, and where did they come from?

Regulation 1.0.02B prescribes $50 million, $25 million and 100 employees for the 2019-20 financial year and later. A spreadsheet copied from the Act's text shows $25 million, $12.5 million and 50.

Questions people ask
about running several companies

What is a large proprietary company in Australia?

Under section 45A(3) of the Corporations Act 2001 and regulation 1.0.02B of the Corporations Regulations 2001, a proprietary company is large for a financial year if it meets at least two of: consolidated revenue of $50 million or more for the financial year, consolidated gross assets of $25 million or more at year end, and 100 or more employees at year end. These figures apply to the 2019-20 financial year and later. Each test includes the entities the company controls.

Do I have to consolidate my companies' accounts?

AASB 10 states that an entity that is a parent shall present consolidated financial statements, subject to listed exemptions, and section 295(2)(b) of the Corporations Act makes consolidated statements the financial statements where the accounting standards require them. Whether a particular group has a parent entity, and whether an exemption applies, is a question for your accountant.

What counts as a related party transaction?

AASB 124 defines it as a transfer of resources, services or obligations between a reporting entity and a related party, regardless of whether a price is charged. An entity controlled by the same person who controls the reporting entity is a related party, and AASB 1060 lists transactions between entities under the common control of a single person as a common example.

How long must company financial records be kept in Australia?

Section 286(2) of the Corporations Act 2001 requires financial records to be retained for 7 years after the transactions covered by the records are completed, in the compilation in force on 19 September 2026.

Does a small proprietary company have to prepare a financial report?

Section 292(2) states that a small proprietary company has to prepare the financial report and directors' report only if it is directed to under section 293 or 294, if it was foreign-controlled and not consolidated in statements lodged with ASIC, or if it has CSF shareholders. Large proprietary companies must prepare them for each financial year under section 292(1)(c).

What this analysis
does and does not show.

Evidence note

What it shows: The size test for proprietary companies under section 45A and regulation 1.0.02B, the control test it borrows from AASB 10, and the related party definitions and minimum disclosures in AASB 124 and AASB 1060, as they bear on a residential building business run through several companies. All quoted from the Federal Register of Legislation and the AASB, read 9 October 2026.
Key facts quoted: Large proprietary company at 2 of 3 tests: consolidated revenue $50 million or more, consolidated gross assets $25 million or more at year end, 100 or more employees at year end (reg 1.0.02B, 2019-20 financial year and later; Act prints $25 million, $12.5 million and 50); control decided under the standards for s 295(2)(b); AASB 10 control elements, consolidation from the date control is obtained, intragroup amounts eliminated in full; AASB 124 paragraphs 9, 18 and 19; AASB 1060 paragraphs 197 and 198; s 292(1)(c) and (2); s 286(2) seven-year retention.
Derived: One calculation: the prescribed figures are twice those printed in the Act ($50 million against $25 million, $25 million against $12.5 million, 100 against 50), our calculation.

We read the Act, the Regulations and the compiled standards, not ASIC or ATO guidance. An ASIC page on large proprietary companies we tried returned page not found, and an ATO page on income tax consolidation returned access denied on 9 October 2026, so income tax consolidation is not covered.
The compiled AASB 124 we read applies to annual periods beginning on or after 1 January 2023 and was prepared on 6 April 2023; the AASB portal shows it operative for periods beginning before 1 January 2027. Later amending standards, if any, are not reflected.
We do not say whether any group has a parent entity, whether any entity controls another, or whether any company is large or small. Those turn on facts and on judgements the standards leave to preparers and auditors.
Audit, lodgement and sustainability reporting obligations of large proprietary companies are not covered.
This is Commonwealth law and Australian Accounting Standards only. Trusts, partnerships and state-based obligations such as home building licensing financial requirements are not covered.
Nothing here is accounting, legal or tax advice.

Bring us the group chart and one year of intercompany invoices.

Tell us which companies sit in the group, when each joined, and how invoices between them are raised today. We will show you which of them a year-end related party schedule and size test could be produced from, and which would have to be rebuilt by hand.

This article is general information about the Corporations Act 2001, the Corporations Regulations 2001 and Australian Accounting Standards. It is not accounting, legal or tax advice, and it does not determine whether any company is large or small, whether any entity controls another, or what any financial report must contain. Statutory text is as in the compilations read on 9 October 2026 (Act compilation No. 149, 19 September 2026; Regulations compilation No. 214, 1 September 2026).

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Sources

Suggested citation: Corporations Act 2001 (compilation No. 149, 19 September 2026), Corporations Regulations 2001 (compilation No. 214, 1 September 2026) and compiled AASB 10, AASB 124, AASB 1053 and AASB 1060, as read 9 October 2026. One figure is derived: the prescribed thresholds are twice those printed in the Act, our calculation.

Several building companies, one owner. The size test counts down the chain, not across it.