The Treasury have announced the financial reporting thresholds for determining proprietary companies as ‘large’ have doubled, with the change effective 1 July 2019.
These new thresholds will mean that for the purpose of the Australian Securities and Investments Commission (ASIC) reporting requirements, entities will be considered ‘large’ if they meet two of the three thresholds for a financial year:
- $50m or more in consolidated revenue;
- $25 million or more in consolidated gross assets or;
- 100 or more employees.
‘Large’ proprietary companies are required to prepare and lodge a financial report, a director’s report and an auditor’s report with ASIC each financial year.
This is the first time the thresholds have changed since 2007, with the aim to reduce financial reporting and audit burden for small-to-medium entities and keep up with economic growth. The Treasury estimates that as a result of the change, one-third (or 2,200) of ‘large’ proprietary companies will no longer meet the thresholds.
However, it’s important to note, the revenue and gross asset measures are based on applying all accounting standards including consolidation, and the new revenue and leases standards – which could still see a proprietary company meeting the gross assets test meaning they’ve met one of the test for becoming a large proprietary company.
Furthermore, while many proprietary companies will no longer need to comply with ASICs reporting requirements, the Treasury warns these newly ‘small’ companies must still meet their usual reporting requirements, including:
- Keeping written financial records with accordance with the law;
- On occasion, be required to prepare audited financial reports if ASIC or five per cent or more of their shareholders request they do so; an
- Comply with their usual corporate obligations in the case of all proprietary companies.
You can access the amending legislation in detail here. For guidance on what reporting obligations your company may have, you can download our easy-to-read guide, or contact your local William Buck ASIC advisor.
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