Ten things to remember for 30 June 2025

This article highlights ten things to remember when preparing 30 June 2025 financial statements. But don’t forget ASIC’s key focus areas for its surveillance of 30 June financial reports as well.

Recently announced tariffs by the United States of America (USA) and continuing global geopolitical and economic uncertainty, including the impact of interest rate increases and inflation, may also affect how to account for certain items at 30 June 2025. Don’t dismiss the effect of tariffs on your business merely because you don’t export to the USA. Tariffs could significantly affect the wider economy due to higher unemployment and lower consumer consumption, and may be inflationary, potentially reducing your revenues and increasing your input costs. Our bulletin outlines how this might affect your 30 June 2025 financial statements.

Not-for-profit entities (NFPs) should consider the above matters where relevant. In particular, companies limited by guarantee that are not registered with the Australian Charities and Not-for-profits Commission (ACNC) must consider if they have mandatory sustainability reporting obligations and public sector NFPs must apply the new fair value measurement guidance for non-financial assets.

 

There have been changes to the disclosures in the consolidated entity disclosure statement (CEDs) for public companies for financial years commencing on or after 1 July 2024 (i.e. 30 June 2025 year-ends onwards). The Treasury Laws Amendment (Fairer for Families and Farmers and Other Measures) Act 2024 received Royal Assent on 10 December 2024 and corrects an anomaly in the CEDs tax residency disclosures contained in s295(3A)(vi) and (vii) of the Corporations Act 2001. 

The CEDs for the financial year ended 30 June 2024 required disclosure of whether the entity was an ‘Australian resident’ or ‘foreign resident’ according to the definitions in the Income Tax Assessment Act 1997 (ITAA 1997). These definitions are mutually exclusive. Therefore, an Australian resident under the ITAA 1997 could not also be disclosed as a foreign resident in the 30 June 2024 CEDs, instead, showing any foreign tax residencies as a footnote. 

For financial years beginning on or after 1 July 2024 (i.e. 30 June 2025 year-ends), the CEDs must:

  • State whether each entity is an Australian resident (based on a new definition of ‘Australian resident’ contained in s295(3B) that includes certain trusts and partnerships)
  • Include a list of each foreign jurisdiction in which the entity was a tax resident for the purpose of tax law of the foreign jurisdiction.

Entities should also include a ‘Basis of preparation’ note explaining how tax residencies have been determined.

Our article contains further information and an example of an updated consolidated entity disclosure statement. See also ASIC’s Information Sheet 284 for further guidance.

The Australian Pillar Two Global and Domestic Minimum Tax (GDMT) laws and rules are now enacted and effective for financial years commencing on or after 1 January 2024 for large multinational entity (MNE) groups in Australia. They introduce a new tax system that is separate from the Income Tax Assessment Act 1997 and must, therefore, be considered when entities calculate their tax liabilities at 30 June 2025 in accordance with the requirements of AASB 112 Income Taxes.

The legislation introduces:

  • The income inclusion rule (IIR), a top-up tax payable by Australian parent entities of MNE groups where any of their subsidiaries have an effective tax rate of less than 15%, and
  • The qualifying domestic minimum top-up tax (QDMTT), a top-up tax where an Australian member of an MNE group has an effective tax rate of less than 15% (the QDMTT is credited against any IIR payable by the parent entity).

These rules apply to MNE groups with consolidated revenue exceeding €750 million for financial years beginning on or after 1 January 2024.

In addition, the undertaxed profits rule (UTPR) will apply to financial years beginning on or after 1 January 2025. The UTPR acts as a backstop rule that allows Australia to apply a top-up tax on Australian entities in a large MNE group if the group has a parent entity in a jurisdiction that has not enacted IIR and the group's effective tax rate in another jurisdiction is below 15%, and that jurisdiction has not enacted QDMTT.

Entities part of an MNE group must assess and recognise Pillar Two tax liabilities for the IIR and QDMTT as appropriate.

Our article contains further information.

These changes apply to annual periods beginning on or after 1 January 2024. Classification of your liabilities may be impacted by one or more of the changes to AASB 101 Presentation of Financial Statements, namely:

  1. The right to defer settlement need not be unconditional and must exist at the end of the reporting period
  2. Classification is based on rights to defer, not intention
  3. Early conversion options for convertible notes that can be settled before maturity by issuing the entity’s own equity instruments will result in the underlying liability being classified as CURRENT if the conversion feature is classified as a liability/derivative liability rather than as equity.  

Regarding a., if your entity has loan arrangements subject to covenants, the amendments clarify when the covenants affect classification at the reporting date. This is illustrated in the diagram below.

Changes to classification requirements for liabilities

Assessing whether the entity must comply with a loan covenant before the reporting date may depend upon whether bankers have provided a ‘waiver’ or a ‘period of grace’. Our publication uses a flowchart and examples to help you determine the correct classification of your loan arrangements. 

With the Australian Government committed to reducing Australia’s greenhouse gas emissions by 43% below 2005 levels by 2030, and achieving net zero emissions by 2050, preparers need to consider the implications of climate-related matters when preparing their 30 June 2025 financial statements. Educational materials published by the International Accounting Standards Board (IASB) summarise how companies must consider climate-related issues when applying IFRS® Accounting Standards. This includes when determining values for assets, liabilities, and provisions, and making disclosures regarding estimates and judgements.

Please refer to our publication for a summary of these educational materials. ESMA’s ‘Heat is On’ Report also provides real-life, practical examples to illustrate how entities can improve their climate-related disclosures for areas where climate matters are likely to have the greatest impact.

Annual periods 

The table below summarises amendments to standards that apply for the first time to 30 June 2025 annual periods. The changes for classifying liabilities and supplier finance arrangements are likely to affect many entities.

Amending standard number

Topic

BDO resources

AASB 2020-1, AASB 2022-6, AASB 2023-3 (amendments to AASB 101)

Classification of liabilities as current or non-current

Publication 

Bulletin

AASB 2023-1 (amendments to AASB 107 & AASB 7) 

Supplier finance arrangements

IASB approves changes to the accounting for supplier finance arrangements

How to account for reverse factoring/supply chain financing arrangements

AASB 2024-1 (amendments to AASB 1060)

Supplier finance arrangements: Tier 2 disclosures

Tier 2 disclosures for supplier finance arrangements

AASB 2022-5 (amendments to AASB 16)

Lease liability in a sale and leaseback

Lease liabilities for sale and leaseback transactions to include variable lease payments that do not depend on an index or rate

AASB 2022-10 (amendments to AASB 13)

Fair value measurement of non-financial assets of not-for-profit public sector entities

AASB issues long-awaited fair value measurement guidance for not-for-profit public sector entities

Half-year periods 

There is only one amending standard effective for the first time to 30 June 2025 half-year periods.

Amending standard number

Topic

BDO resources

AASB 2023-5 (amendments to AASB 121, AASB 1060)

Lack of Exchangeability

How to determine the exchange rate when a currency is not exchangeable into another currency

You can find more information about these amendments in the listed resources, or contact our IFRS & Corporate Reporting team for assistance. 

IFRS Interpretations Committee (the Committee) agenda decisions are those issues the Committee decided not to include on its agenda. Although not authoritative guidance, these decisions are regarded as being highly persuasive in practice. All entities reporting under IFRS® Accounting Standards should be aware of these decisions, as they could impact how particular transactions and balances are accounted for. Entities are generally expected to implement any resulting changes in accounting policies in the first set of financial statements following an agenda decision, although this timeframe may be extended where detailed systems and process changes are required.

Over the past twelve months, the Committee has issued the following agenda decisions:

Please ensure your 30 June 2025 annual and half-year financial statements reflect the conclusions in these agenda decisions.

Despite a recent spike in inflation, Australia has experienced low inflation levels for decades, and many entities may not be aware of special accounting requirements when an entity operates in countries whose economy and functional currency are considered hyperinflationary.

When an entity’s functional currency is ‘hyperinflationary’, AASB 129 Financial reporting in hyperinflationary economies requires the financial statements (including any comparative periods) to be stated in terms of the measuring unit current at the end of the applicable reporting period. This is because the currency of a hyperinflationary economy loses a significant amount of purchasing power from period to period, such that presenting financial information based on historical amounts, even if only a few months old, does not provide relevant information to users of financial statements.

Which economies are considered hyperinflationary as at 30 June 2025

Economies that ceased being hyperinflationary in 2025

Economies that became hyperinflationary in 2025

Economies that have a risk of becoming hyperinflationary (watchlist for 2025 onwards)

  • Argentina
  • Burundi
  • Ghana
  • Haiti
  • Islamic Republic of Iran
  • Lao People’s Democratic Republic
  • Lebanon
  • Malawi
  • Sierra Leone
  • South Sudan
  • Sudan
  • Suriname
  • Turkey
  • Venezuela
  • Ethiopia
  • Burundi

 

  • Angola
  • Egypt
  • Myanmar
  • Nigeria
  • Syria
  • Zimbabwe

Please refer to our publication for more information.

Entities preparing Tier 1 general purpose financial statements for the annual period ending 30 June 2025 must disclose the anticipated effect of new and amended standards issued, which are not effective at the reporting date (refer to AASB 108, paragraph 30). These are listed in the table below. Please refer to the resources listed for more information or contact our IFRS & Corporate Reporting team for assistance.

Standard number

Topic

BDO resources

Effective for annual periods commencing

All entities 

AASB 18

Presentation and disclosure in financial statements

Publication

1 January 2027

AASB 2024-2

Classification and measurement of financial instruments, including:

  • The appropriate date for derecognising financial assets and liabilities 
  • Application guidance to clarify the ‘SPPI test’

Do financial assets with ESG-linked features meet the SPPI test?  

When is the appropriate time to derecognise trade receivables and payables settled via electronic bank transfers?

Bulletin

1 January 2026

AASB 2025-1

Contracts referencing nature-dependent electricity

Bulletin

1 January 2026

AASB 2023-5

Lack of exchangeability

How to determine the exchange rate when a currency is not exchangeable into another currency

1 January 2025

AASB 2024-3

Annual improvements Volume 11

-

1 January 2026

Public sector entities only  

AASB 2022-9

Insurance contracts in the public sector

-

1 January 2026

In addition to considering the impacts of climate-related matters on amounts recognised in the financial statements, entities preparing and lodging financial statements with ASIC under Chapter 2M of the Corporations Act 2001 should be aware of their upcoming mandatory sustainability reporting obligations.

The start date is for years commencing 1 January 2025, with a phase-in period for entities of different sizes and types. In particular, very large entities and those meeting the publication thresholds in the National Greenhouse and Energy Reporting Act 2007 (NGER Act), referred to as ‘Group 1’ entities, will have to prepare a sustainability report as part of their 31 December 2025/30 June 2026 annual reports.

Climate-related disclosures are the first, and currently the only, component of mandatory sustainability reporting. Although not immediately effective for Group 2 and Group 3 entities, this is a significant new area of reporting, and entities will require a significant time investment to derive the required information.

The required disclosures are contained in AASB S2 Climate-related Disclosures and are subject to a phased-in period of assurance. The table below outlines the four ‘pillars’ and key areas for climate-related disclosures.

GovernanceStrategyRisk managementMetrics & targets
Disclosures over governing body(s) / individuals responsible for process, controls and procedures used by the entity to monitor, manage and oversee climate-related risks and opportunities

Climate-related risks and opportunities

  • Physical risks
  • Transition risks
Process and related policies the entity uses to identify assess, prioritise and monitor climate-related risks

Greenhouse gas emissions

  • Scope 1
  • Scope 2
  • Scope 3
Business model and value chain
Disclosure of management's role in the governance processes, controls and procedures (e.g. when responsibility delegated)Strategy and decision makingProcesses and related policies the entity uses to identify, asses, prioritise and monitor climate-related opportunitiesCross-industry requirements
Financial position, financial performance and cash flowsThe extend to which the above processes and related policies are integrated into the overall risk management process and risk registerClimate targets
Climate resilience & Scenario analysisFinanced emmissions (associated with loans and investments made by the entity)

This article addresses key questions about mandatory sustainability reporting in Australia. If you need further assistance, please reach out.

Other obligations for listed entity climate reporting

We also remind Australian listed entities that the Australian Securities Exchange (ASX) and the Australian Securities and Investments Commission (ASIC) expect disclosure of climate-related risks and opportunities using the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) recommendations. This applies to the Corporate Governance Statement and the Operating and Financial Review.

Entities only need to disclose material accounting policy information for years ending on or after 31 December 2023. This also applies to Tier 2 entities preparing financial statements using the Simplified Disclosures. The long laundry list of accounting policies, which merely repeat recognition and measurement requirements from the accounting standards, can be removed.

While these changes applied last year, many entities did not streamline their accounting policies to include only material accounting policy information. Keeping immaterial accounting policies is a big time-waster both for preparers and auditors. Culling unnecessary accounting policies in June 2025 financial reports is a good investment - a little time spent now will deliver time savings in the future and more clarity for users of the financial statements.

Our article explains what accounting policy information is material and what is not.

More information

Our recent webinar contains further useful tips to help you on your 30 June 2025 reporting journey.

We are here to help

Please contact our IFRS & Corporate Reporting team if you need support with any financial reporting matters for your 30 June 2025 financial reports.