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24. Raising the bar to redefine Large Proprietary Companies

The threshold to define large proprietary companies has been raised since July 1, 2019. Previously it was revised in 2007 so the update had been long due.

 

The AICD actively advocated increasing the threshold as it will remove the obligation for around 2200 companies from lodging their financial statements publicly with ASIC. The Treasury estimates the change will benefit small businesses and save around $81 million a year.

 

According to this initiative, a company that meets two of these three requirements will be defined as a large proprietary company:

 

  • Revenue at least $50 million
  • Assets at least $25 million
  • At least 100 employees

 

The new threshold will apply from 2019-2020 financial years onwards. There might be some exceptions where the existing legal requirements may apply such as:

 

  • A small proprietary company subject to a direction to prepare and lodge financial statements from ASIC or its shareholders.
  • A small foreign-controlled company.
  • A company with a few crowdsourced funding shareholders during the financial year.

 

The threshold is recommended to increase for charities from the current $250000 to $1 million annual revenue determined on a rolling three-year basis. The AICD has also supported the threshold for the not-for-profit sector.

 

This step would certainly increase the burden on not-for-profit companies that were lodging special purpose financial statements earlier. It will widen the pool of entities to prepare financial statements complying with Australian Accounting Standards.

 

The initiative to increase the threshold for large proprietary companies will exclude around 2200 small companies to publicly lodge the financial statements with ASIC. The Treasury estimated that it would save small businesses around $81.3 million in a year.

 



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