The Federal Government is proposing to reduce the financial reporting burden for proprietary limited companies by increasing the thresholds for the small/large proprietary company test.
Under current legislation, a company must prepare and lodge an audited financial report with the Australian Securities and Investment Commission if it meets two out of three “large” thresholds for revenues, gross assets, and employees.
The change to the company test proposes to increase the thresholds as follows:
the consolidated revenue for the financial year of the company and the entities it controls from $25 million to $50 million;
the value of the consolidated gross assets at the end of the financial year of the company and the entities in controls from $12.5 million to $25 million; or
the company and the entities it controls having 50 employees to 100 employees at end of the financial year.
Any companies that are no longer “large” under the increased thresholds will not have to prepare financial reports unless they are directed to, either by five per cent of the shareholders, or by ASIC.
The proposed changes in thresholds will apply to financial years beginning on or after 1 July 2019, meaning that affected companies will not have to lodge accounts for years ended 30 June 2020 or subsequent years.
The exposure draft regulations is open for comment until the 14th of December. For more information or to submit a response click here