Saturday, April 13, 2024

‘Legislation passed for enhanced tax transparency’

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The Australian public companies will soon be subject to new disclosure requirements following the passing of Schedule 1 of the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share – Integrity and Transparency) Bill 2023. The bill, which awaits royal assent to become law, will take effect for financial years beginning on or after July 1, 2023.

Once enacted, both listed and unlisted Australian public companies will be obligated to include a ‘consolidated entity disclosure statement’ as part of their annual financial reporting responsibilities under Chapter 2M of the Corporations Act.

This statement must detail various information about entities within the consolidated entity at the end of the financial year, including names, type of entity, role within the entity, place of incorporation or formation, percentage ownership by the public company, tax residency, and jurisdiction where the entity was a resident for foreign income tax purposes.

If the accounting standards do not mandate financial statements for a consolidated entity, this fact must be explicitly stated in the disclosure statement. Directors, chief executive officers, and chief financial officers are required to declare the accuracy of the consolidated entity disclosure statement with the standard of ‘true and correct’ to ensure comprehensive and precise disclosures.

Moreover, the consolidated entity disclosure statement will be subject to the existing audit framework under the Corporations Act as it forms part of the entity’s annual financial report.

These new disclosure requirements aim to enhance transparency and accountability within Australian public companies, ensuring accurate and complete reporting for stakeholders and investors.

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