There are new requirements for Significant Global Entities to prepare General Purpose Financial Statements.
Recent guidance from the ATO has clarified the effect of changes made last year to Section 3CA of the Tax Administration Act 1953.
The legislation introduced additional reporting requirements for some Australian entities, and for some foreign entities carrying on business in Australia. The aim of the legislation is to improve tax transparency for certain multinational entities and large privately owned organisations, by requiring them to lodge general purpose financial statements (“GPFS”)
The changes come into effect for tax income years starting on or after 1 July 2016. Where there is a difference between the tax income year and the financial reporting year end, the rule applies to the financial year most closely corresponding to the relevant income year.
Section 3CA is a financial transparency measure.
It operates entirely independently of the tax transparency measures, such as Country by Country reports, the International Dealings Schedule, or transfer pricing documentation.
The new financial reporting requirements are in addition to the financial reporting and audit requirements of the Corporations Act 2001. All existing Corporations Act reporting requirements remain in place. The ATO continues to carry out a consultation process in respect of the implementation of this legislation, and therefore further guidance may be issued in future.