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19RU-004 Proprietary company threshold: When large becomes small

19RU-004 Proprietary company: When large becomes small

The government has amended the statutory financial reporting thresholds for proprietary companies. The amended regulations doubles the thresholds for determining whether a company is a large or small proprietary company for a financial year.

Michael Voogt

Director, Department of Professional Practice

KPMG Australia


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Change to Corporations Regulations

On 16 November 2018 the government released a public consultation Exposure Draft Corporations Amendments (Proprietary Company Thresholds) Regulations 2018. After stakeholder comment the government registered the Corporations Amendments (Proprietary Company Thresholds) Regulations 2019. Registration occurred on 5 April 2019. No changes have been made to the Regulations, as exposed, following the consultation process.

The new regulation doubles the thresholds for determining whether a company is a large or small proprietary company for a financial year. A proprietary company is large if it meets two of the three thresholds at the end of its financial year. Otherwise it is small. The table below outlines the three thresholds.

Threshold Current From 1 July 2019
Consolidated revenue for the financial year * $25 million or more $50 million or more
Consolidated gross assets at the end of the financial year *
$12.5 million or more

$25 million or more
Employees^ of the company and the entities it controls
50 FTE employees or more

100 FTE employees or more

Under the Corporations Act 2001 (Corps Act), large proprietary companies are required to lodge an annual financial report, a director’s report and an auditor’s report with ASIC. Small proprietary companies have no such requirement to lodge (unless directed to by ASIC or directed by 5% or more of their shareholders) and are generally required to keep sufficient financial records.

The above change applies in relation to financial years beginning on or after 1 July 2019 – i.e. 30 June 2020 year ends.

Impact of change in thresholds

The effective doubling of the thresholds will potentially impact:

  • large proprietary companies
  • foreign controlled small proprietary companies who are currently part of a ‘large group’ (ASIC Instrument 2017/204).

The explanatory statement makes the following observations:

  • The thresholds have not been reviewed or adjusted since 2007.
  • The revenue and asset thresholds have been increased to account for nominal economic growth since 2007.
  • The increased thresholds will ensure financial reporting obligations are targeted at economically significant companies, while reducing the costs for smaller sized companies.
  • Approximately one third of proprietary companies that lodged audited financial reports with ASIC in the 2017-18 financial year will no longer be required to lodge financial reports under the increased thresholds.

Next steps for proprietary companies

We encourage you to review the updated financial reporting thresholds and consider the financial reporting requirements for each proprietary company you own, for years ending 30 June 2020 and beyond.

Further discussion on the practical considerations when applying the above requirements can be found in the attached PDF version of the Reporting Update.


*For the company and any controlled entities.

^Part-time employees are counted as an appropriate fraction of the full-time equivalent (FTE).

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