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.
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.
The effective doubling of the thresholds will potentially impact:
The explanatory statement makes the following observations:
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).
©2020 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation.
Liability limited by a scheme approved under Professional Standards Legislation.
For more detail about the structure of the KPMG global organisation please visit https://home.kpmg/governance.