In December 2015 tax law amendments were enacted requiring significant global entities (SGEs) to provide the ATO general purpose financial statements (GPFS) at the time they lodge a tax return, if the entity does not already lodge GPFS with ASIC within required deadlines. The amendment applied for income years beginning 1 July 2016.

In response to feedback from external stakeholders, the ATO has issued updated web guidance in April 2019. This guidance replaces previous guidance issued in September 2017. The updated guidance provides ATO views on practical issues encountered by stakeholders when seeking to satisfy the GPFS regime.

The April 2019 update seeks to:

• clarify the requirements and options available when determining whether the GPFS are for the taxpayer who may or may not be a member of a group of entities
• clarify which ATO scenario foreign controlled small proprietary companies fall into
• expand on what accounting principles the ATO considers to be commercially accepted principles relating to accounting (CAAP)
• provide further guidance for multiple entry consolidated group (MEC) groups around consolidation, aggregated or combined financial statements
• clarify the term ‘financial year most closely corresponding to the income year’. 

No further formal consultation period has been announced by the ATO following the release of the April 2019 additional guidance.

KPMG has updated its practical guide ATO provision of general purpose financial statements (PDF 977KB) to assist you in understanding the impact of the new guidance issued by the ATO. The KPMG guide provides information on the issues identified in complying with the tax law amendments and includes a number of illustrative examples of the options available to entities.

The publication represents KPMG’s views based on information current at 8 April 2019.

The KPMG guide (PDF 977KB) considers a number of issues, including:

• What are GPFS?
• Who has an obligation to lodge GPFS with the ATO?
• What options does a taxpayer have when required to lodge GPFS with the ATO?
• What is CAAP?
• Foreign residents conducting a business through a permanent establishment – for example, branch operations
• ATO best practice guidance
• Frequently asked questions around content of GPFS
• Impact of ASIC reporting relief on requirement to lodge GPFS with the ATO
• When and how to lodge with the ATO
• 15 illustrative examples noting options available to taxpayers
• Issues which would benefit from further ATO clarification.

The entities most impacted by the tax law amendments will be the following types of SGE (i.e. income of A$1 billion or more) corporate taxpayers:

• foreign owned companies that are currently preparing and lodging SPFS with ASIC
• foreign owned companies that are small proprietary companies which are not currently preparing financial reports under the Corporations Act 2001 (as they are not part of a large group)
• locally owned companies that are currently preparing and lodging SPFS with ASIC
• companies which currently receive ASIC relief from preparation and/or lodgement of financial statements – for example, grandfathered (exempt) proprietary companies or groups with deeds of cross guarantee in place.

Further discussion on practical considerations when applying the tax law amendments can be found in the attached PDF version of the Reporting Update.

Companies that are impacted by the tax law amendments should consider how to best satisfy the GPFS requirements under the options available. The requirements may require additional information to be collected and presented in financial statements. This will likely involve significant additional time and cost.

If you have any further questions please contact your KPMG partner.

• 19RU-005 New guidance: Provision of GPFS to ATO (PDF 214KB)
• ATO provision of general purpose financial statement – KPMG guide (PDF 977KB)