The Federal Government has doubled the size thresholds for large proprietary companies reporting under the Corporations Act 2001 (“the Act”) effective for financial years beginning on or after 1 July 2019. The changes do not affect proprietary company reporting requirements for financial years ending on or before 30 June 2019.
The size thresholds for classifying a proprietary company as either ‘large’ or ‘small’ are contained in section 45A of the Act and have not changed since 2007. Under the Act, large proprietary companies are required to prepare and lodge an annual financial report, a director’s report and an auditor’s report with the Australian Securities and Investments Commission (“ASIC”).
The changes introduced to the thresholds by way of Regulation are as follows:
A proprietary company is large if it satisfies at least two of the above three tests.
Treasury estimates that approximately one third of proprietary companies that lodged audited financial reports with ASIC for the 2017-18 financial year will no longer be required to lodge financial reports from the 2019-20 financial year under the increased thresholds.
The amendments are contained in the Corporations Amendment (Proprietary Company Thresholds) Regulations 2019. Treasury released the draft regulations for public consultation in late 2018. There were 35 submissions on the proposals, including from Nexia Australia. The submissions provided a wide range of views on what the thresholds for determining a large proprietary company should be. No changes were made to the final Regulations as a result of the consultation process.
If you do have any questions, or would like any information on what these changes mean for you, please contact a Nexia Advisor.
