All Australian public companies will need to include a new consolidated entity disclosure statement in their financial statements for years ending 30 June 2024 and subsequently.

This reflects the implementation of changes originally announced in the October 2022 Federal Budget, which indicated that public companies would need to disclose information on all of their subsidiaries, including their country of tax domicile. This has now been achieved by amending the Corporations Act 2001 to require all public companies to include this information in their annual financial report.disclosure statement

Since it forms part of the annual report, this information will be subject to audit. Additionally, the directors’ declaration within the financial report has been expanded to include a new declaration that the consolidated entity disclosure statement is “true and correct” as at the reporting date.

Commenting on the changes, Ralph Martin, National Technical Director at RSM Australia stated:

“This is not the first time that tax transparency legislation has had a significant impact on annual financial reporting. While some of the information provided may seem relatively routine, Directors should not underestimate the impact. The required declaration on the consolidated entity disclosure statement puts the onus on directors to ensure that the listing is complete, and also to ensure that they properly understand the tax residency status of all of their subsidiaries.”

Further information is set out below:

Who is affected?

The new requirements apply to all public companies as defined under the Corporations Act 2001. This includes both listed companies, and unlisted companies who are not proprietary companies.

Any entities which are not companies, such as registrable superannuation entities and registered managed investment schemes, are not subject to this legislation.

Companies Limited by Guarantee are public companies, and are therefore subject to the new requirement if they report under the Corporations Act.  However, Companies Limited by Guarantee which are registered with the Australian Charities and Not-for-Profits Commission, and therefore report under the ACNC Act, are not affected by this change.

What is required to be included in the statement?

The following information is required in respect of each subsidiary:

  • The entity’s name
  • Whether the entity was a body corporate, partnership or trustfinancial statements
  • Whether the entity was a trustee of a trust within the consolidated entity, a partner in a partnership within the consolidated entity, or a participant in a joint venture within the consolidated entity
  • For corporate entities, where the entity was incorporated or formed
  • If the entity is a body corporate with share capital, the percentage of the entity’s issued share capital held directly or indirectly, by the public company
  • Whether the entity was an Australian resident or a foreign resident for income tax purposes
  • If the entity was a foreign resident for income tax purposes for the relevant year, a list of each foreign jurisdiction in which the entity was tax resident.

The format of this information is not specified. However, a tabular format is likely to be appropriate.

Which entities must be included?

All subsidiaries must be included, regardless of size and activity. This means that even dormant entities must be included.

However, the legislation only requires entities which are subsidiaries as at the end of the financial year to be included. Therefore there is no requirement to list changes which occurred during the year or to provide details of entities which were liquidated or disposed during the year.

The requirements apply to subsidiaries only. There is no requirement to include associates, joint ventures, or other entities which are not consolidated into the financial statements.

What if a company has no subsidiaries?

An entity which does not prepare consolidated financial statements because it does not have any subsidiaries is required to make a specific statement to that effect. An example of the statement is below:

Consolidated Entity Disclosure Statement as at 30 June 2024
Subsection 295(3A)(a) of the Corporations Act 2001 does not apply to the company, because the company is not required to prepare consolidated financial statements by Australian Accounting Standards.

Is comparative information required?

No comparative information is required. The requirement only applies to entities that were consolidated as at the end of the current financial year.

What does “true and correct” mean?ifrs news

The directors are required to sign off the consolidated entity disclosure statement as being “true and correct.” This is in addition to the requirement to sign off the financial statements as “true and fair.”

“True and correct” is not terminology that has been used in financial reporting before, although it already applies to tax returns, which must be signed off as “true and correct” at point of lodgement.

“True and correct” is not defined, but its ordinary English meaning would appear to imply a higher threshold of accuracy than “true and fair,” and suggests a requirement to ensure the accuracy of all required information, without regard to its materiality.

Where should the consolidated entity disclosure statement be included within the financial report?

The Corporations Act is not explicit on this point. It would therefore be acceptable to include it within the Notes to the financial statements.

However, given the requirement for the directors to certify the consolidated entity disclosure statement as “true and correct”, it is important that it is clear exactly what information is covered by this declaration. In our view, the best approach to achieve this would be to include it as a separate statement after the notes to the financial statements, which is clearly headed as “consolidated entity disclosure statement.”

What about my existing disclosures?

The changes to the Corporations Act 2001 do not replace or reduce any of the existing requirements of Australian Accounting Standards.

Since the consolidated entity disclosure statement is a separate statement, this will lead to duplication of some information already presented about subsidiaries and group structures in the notes to the financial statements.


If you would like to learn more about the topics discussed in this article, please contact your local RSM office.