ATO seeking views on types of general purpose financial reports required by multinational entities
In our December 2015 Accounting News, we noted the passage through Parliament of the Tax Laws Amendment (Combining Multinational Tax Avoidance) Bill 2015, which will require multinational corporations with global revenue of $1 billion or more, to give the Tax Commissioner general purpose financial statements (GPFS) with their annual tax return. These new rules apply to income years beginning on or after 1 July 2016.
Our article highlighted problems in the new s3CA of the Taxation Administration Act 1953, including that it did not specify whether:
- These GPFS need to be audited
- Reduced disclosures would be permitted (Tier 2), and
- Consolidated financial statements of the overseas parent could be lodged.
On 15 August 2016, the Australian Tax Office (ATO) released for consultation, Provision of general purpose financial statements by significant global entities which seeks to clarify these issues.
Entities most likely to be affected by these amendments are Australian entities part of a multinational group that currently do not lodge any financial statements with the Australian Securities and Investments Commission (ASIC), because, for example:
- They are grandfathered, or
- They are relieved from lodging financial statements because they are small and not part of a large Australian group (Class Order 98/98) or because the wholly-owned subsidiary Class Order 98/1418 is being applied.
These proposals mean that the ‘grandfathering’ exemption from lodging financial statements with ASIC will no longer apply to entities that are part of a multinational group with $1 billion revenue or more. This is because the ATO will be required to send these GPFS to ASIC for lodgement on the public record.
The closing date for submissions is 30 September 2016. We encourage you to submit comments if you will be impacted by the amendments.