Know your Australian financial reporting obligations
By Tony Nunes, Kelly + Partners Chartered Accountants
When setting up a business in Australia there are several key planning items that should be addressed which are not always front-of-mind, but if ignored may result in costly mistakes. For example, if an overseas company is conducting business in Australia, it will be required to lodge the foreign parent’s financial statements with the Australian Securities and Investment Commission (ASIC) each year, as well as have other obligations. Therefore it is common for foreign businesses to have an Australian subsidiary.
However, Australian companies that are controlled by a foreign company must prepare and lodge audited financial reports with the ASIC. Relief from preparing audited accounts is available where a company satisfies the following:
- It is a small proprietary company that is not part of a large group – i.e., it and the group it is a part of satisfies at least two of the following criteria:
a) consolidated revenue is less than AUD 50 million;
b) the value of the consolidated gross assets at the end of the financial year (FY) is less than AUD 25 million; or
c) it has fewer than 100 employees.
- The Australian subsidiary is controlled by a foreign company for all or part of the FY.
- The directors must have resolved, no earlier than three months before the start of the relevant FY, that the relief from reporting be relied on.
- In the first year of the audit relief, the ASIC must be notified of the directors’ resolution within four months after the FY end.
- The ASIC has not notified the company that it may not rely on relief.
Accurate and timely financial reporting is crucial as failure to comply with Australian statutory financial reporting obligations is a criminal offence with strict liability attached.
This is a key focus area for the ASIC and it is taking action against entities, especially foreign-controlled entities, that fail to comply with their financial reporting obligations.
Tony NunesGGI member firm
Kelly + Partners Chartered Accountants
Advisory, Auditing & Accounting, Corporate Finance, Tax, Fiduciary & Estate Planning
T: +61 2 9933 8866
Kelly + Partners Chartered Accountants is a specialist chartered accounting business that assists private businesses, private clients, and families to manage their business and personal financial affairs. The Kelly + Partners Tax Consulting practice is respected as one of the foremost tax advisory firms in Australia and offers the full range of direct, indirect, and international tax services.
Tony Nunes has over 22 years’ experience in providing tax advice. He has extensive experience in advising clients on issues affecting cross-border transactions, acquisitions, and restructures, and in all aspects of structuring the ownership and financing of corporations and their operations.
Published: Auditing, Reporting & Compliance Newsletter, No. 06, Autumn 2021 l Photo: f11photo - stock.adobe.com