Increase in New Zealand financial reporting thresholds for ‘large’ companies

The New Zealand Companies Act 1993 requires all large companies to prepare and, for overseas companies and subsidiaries of overseas companies, to file audited financial statements with the New Zealand Companies Office (Companies Office). The definition of ‘large’ is contained in section 45 of the Financial Reporting Act 2013. Companies are ‘large’ if either total assets or total revenue exceeds certain thresholds in an entity’s preceding two reporting periods. The recent Financial Reporting (Inflation Adjustments) Regulations 2021 made inflation-related adjustments to these asset and revenue thresholds.

Australian entities impacted by these amendments are:

New Zealand subsidiaries of Australian companies, and
Australian entities with a New Zealand branch, where the Australian financial statements must be filed with the Companies Office.

Preparers should take note of the new reporting thresholds because these entities may no longer be ‘large’, and financial statements may no longer be required to be filed with the Companies Office.

New thresholds

The table below shows the current thresholds, as well as the revised thresholds introduced by the Financial Reporting (Inflation Adjustments) Regulations 2021:

Overseas company (e.g. an Australian company with a New Zealand branch) or subsidiary of an overseas company (s45(2))	Current s45 requirements	New thresholds
Total assets*	$20 million	$22 million
Total revenue*	$10 million	$11 million
New Zealand companies other than overseas companies or subsidiaries of overseas companies (s45(1))	Current s45 requirements	New thresholds
Total assets*	$60 million	$66 million
Total revenue*	$30 million	$33 million
*On a group basis, i.e. for the company and its subsidiaries

Do both the asset and revenue thresholds have to be met in order to be a large company?

No. A company is large in respect of an accounting period if at least one of the above thresholds is met:

Total assets – at the balance date (year-end) of each of the two preceding periods
Total revenue – for each of the two preceding periods.

It is important to note that we do not assess the thresholds for the current accounting period, but rather for the two preceding periods.

When do these new thresholds apply?

These regulations come into force on 1 January 2022. This means that entities with a year ending on or after 1 January 2022 must apply the new size limits. A company with a year ending 31 December 2021 would apply the old thresholds but one with a 31 January 2022 year-end would apply the new size limits.