Reporting Update 24RU-13
On 27 September 2024, Treasury released a consultation proposing amendments to clarify disclosures made in the Consolidated Entity Disclosure Statement for financial years commencing on or after 1 July 2024, i.e. annual financial reports for 30 June 2025 and onwards. The consultation included an Exposure Draft Bill Treasury Laws Amendment Bill 2024: Minor and technical Amendments (Spring 2024) (ED Bill).
Current requirements
The Treasury Laws Amendment (Making Multinationals Pay Their Fair Share – Integrity and Transparency) Act 2024 (Amendments) was enacted in April 2024. The Amendments changed the Corporations Act 2001 (Corps Act) and introduced new mandatory disclosures for inclusion in annual financial reports.
These changes require Australian public companies (both listed and unlisted) to disclose details for each subsidiary in their consolidated financial statements – the ‘Consolidated Entity Disclosure Statement’ (CEDS) – including the tax residency of each of those entities at the end of the financial year.
New proposals
With the recent adoption of the CEDS by public companies, it has become apparent that certain amendments and clarifications were needed to the requirements to ensure they functioned as intended, reducing areas of interpretation and diversity in practice.
The ED Bill aims to clarify the tax residency disclosures required in the annual financial report.
The key proposed amendments cover:
- tax residency disclosures where entities are resident in more than one jurisdiction; and
- inserting a definition of ‘Australian resident’ for Partnerships and Trusts.
Comments on the consultation are open until 11 October 2024.
These proposed amendments are expected to clarify some of the interpretive positions taken in applying the CEDS requirements. Consistent with the existing requirements, it is anticipated that the additional disclosures relating to multiple tax residencies for entities may require substantial judgement and involvement of legal or tax specialists. We encourage early consideration of the impact on your governance processes in ensuring that the proposed additional information needed is complete and accurate.
Download Reporting Update
We unpack the Treasury’s Bill proposed amendments and clarifications further in our Reporting Update.
