November 29, 2018

Professionals | QLD

Welcome news for many companies required by law to prepare and lodge with ASIC audited financials, or who are relying on class order or discretionary relief. On 16 November 2018, the Government announced plans to increase the relevant thresholds for determining whether a company is a large proprietary company.

what is the rationale for the proposed changes?

Treasurer Josh Frydenberg and Senator Michaelia Cash announced the plan to increase the thresholds for determining large proprietary company status, for the first time since 2007, as part of the Government’s push to cut red tape for small to medium sized businesses. The Government estimates that the companies that will no longer be required to prepare and lodge with ASIC audited financial reports will save on average $36,950 per year as a result of the changes.

What are the Changes?

Large proprietary companies are subject to financial reporting and audit requirements that are otherwise not imposed on small companies. Each financial year large proprietary companies are required to prepare and lodge with ASIC (subject to limited exceptions):

  • an audited financial report;
  • a director’s report; and
  • an auditor’s report,

whereas small proprietary companies are only required to maintain written records.  

The proposed changes to the relevant thresholds are as follows:

Current threshold

Proposed threshold

$25 million or more in consolidated revenue

$50 million or more in consolidated revenue

$12.5 million or more in consolidated gross assets

$25 million or more in consolidated gross assets

50 or more employees

100 or more employees

When will the proposed thresholds take effect?

The changes to the thresholds are proposed to commence from 1 July 2019, which means that companies that may benefit from the changes need to remain diligent with their obligations under the Corporations Act and in respect of any relief they may be afforded for the 2018/2019 financial year.

Summary

The proposed changes are welcome news for companies currently considered to be large proprietary companies that do not satisfy the current thresholds but which do fit under the proposed thresholds.

The proposed changes are currently in draft form, with the Government seeking consultation and comment. The consultation period closes on 14 December 2018.

HOW CAN MCINNES WILSON LAWYERS HELP?

McInnes Wilson Lawyers are able to assist:

  • to determine a company’s status as a large proprietary company;
  • to review and advise on a company’s reporting obligations under the Corporations Act; and
  • in accessing relief from the Corporations Act requirements regarding  a company’s reporting obligations.