Under the Corporations Act 2001, large proprietary companies are required to lodge an annual financial report, a directors’ report and an auditor’s report with ASIC, while smaller proprietary companies generally only required to keep sufficient financial records.
Currently, proprietary companies are considered to be ‘large’, if they meet at least any two of the following three thresholds for a given financial year:
- $25 million or more in consolidated revenue;
- $12.5 million or more in consolidated gross assets; or
- 50 or more employees.
On 16 November 2018, the Government announced it will reduce the reporting burden for small and medium sized businesses by doubling the financial reporting thresholds.
The Government estimates around a third of large proprietary companies (2,200 out of approximately 6,600) will no longer be classified as ‘large’ and therefore will no longer be required to comply with financial reporting and audit requirements. This is estimated to save small and medium sized businesses more than $300 million over four years.
Public consultation on the Corporations Amendment (Proprietary Company Thresholds) Regulations 2018 and the explanatory statement is now open.
- Public consultation opened on 16 November 2018. Responses can be submitted to this consultation up until 14 December 2018.
- Fact sheet: Reducing the financial reporting burden for SMEs