Proposed changes to financial reporting thresholds
On 16 November, an exposure draft of the Corporations Amendment (Proprietary Company Thresholds) Regulations 2018 was released proposing to increase the thresholds that determine a large proprietary company under section 45A of the Corporations Act 2001 (Cth).
Under the current regulations and section 45A, a company will be a large proprietary company if it meets two of the following criteria:
• $25 million or more in consolidated revenue;
• $12.5 million in gross assets; or
• 50 or more full-time equivalent employees.
Simply, the proposed regulation doubles the existing thresholds, meaning a company will only be a large proprietary company if it meets two or more of the following criteria:
• $50 million or more in consolidated revenue;
• $25 million in gross assets; or
• 100 or more full-time equivalent employees.
The obvious benefit of the proposed changes is that the significant costs involved in satisfying the reporting requirements of the Corporations Act, namely the preparation of general purpose financial statements, will no longer be imposed upon companies affected by the changes.
Significantly, the Federal Treasurer estimated the annual cost of preparing audited financial statements to be approximately $36,950 per company, with the proposed changes reportedly relieving $81.3 million in administrative costs annually.
If you believe the changes will affect you, please contact Roberts & Morrow to discuss the changes further.