Transitional administrative approach for significant global entities required to lodge general purpose statements
All legislative references in this document are to the Taxation Administration Act 1953 unless otherwise stated.
We adopted a transitional administrative approach to assist you for the first year that section 3CA takes effect.
Section 3CA requires some corporate tax entities to give us a general purpose financial statement (GPFS) prepared in accordance with Australian Accounting Standards.
You could choose to adopt this transitional administrative approach for your income year commencing between 1 July 2016 to 30 June 2017, if:
- Australian Accounting Standards applied in relation to you, and
- you seek to lodge a consolidated GPFS that relates to you and is prepared under commercially accepted accounting principles.
For example, you could have applied this transitional administrative approach if you fell within scenario 2 in Table 1 of the Guidance on the provision of general purpose financial statements. This approach can still be adopted by entities where the due date for the lodgement of their income tax return for the income year commencing between 1 July 2016 to 30 June 2017 has passed or has not yet occurred.
Why we are offering a transitional approach
For income years commencing on or after 1 July 2016, you must give us a GPFS prepared in accordance with Australian Accounting Standards if:
- you are a corporate tax entity
- you meet the conditions set out in subsection 3CA(1), and
- Australian Accounting Standards apply in relation to you.
Whether a GPFS is prepared in accordance with Australian Accounting Standards is a question of fact. Any financial reports prepared in accordance with Australian Accounting Standards must duly note this fact (see AASB 1054 Australian Additional Disclosures).
While paragraph 3CA(5)(a) mandates how your GPFS must be prepared, we understand that you may have either:
- experienced difficulties in establishing systems within the time that you have to give us a GPFS prepared in accordance with Australian Accounting Standards
- encountered unexpected additional costs, particularly if you have not previously prepared your financial reports in accordance with Australian Accounting Standards
As a consequence of these difficulties, you may be at risk of exposure to administrative penalties for not meeting your obligation to give us a GPFS.
In recognition that you may have experienced transitionary problems, we offer an interim administrative approach for the first year that section 3CA requires lodgment of a GPFS. Taking up our transitional approach is optional for you.
The scope of our transitional administrative approach
In relation to your GPFS for your financial year most closely corresponding to your income year that commenced between 1 July 2016 and 30 June 2017, we will not review whether the GPFS you give us is prepared in accordance with Australian Accounting Standards. This is as long as it is prepared consistently with another country's commercially accepted accounting principles.
If the financial statement given by you does not comply with the law in some other way, we may review your GPFS.
There was a transitional administrative approach for the first year that significant global entities are required to give the ATO a general purpose financial statement.
Example – global parent's GPFS closely corresponding to your income year
You choose to use the transitional administrative approach and give us your global parent's GPFS for the income year 1 July 2016 to 30 June 2017. Your global parent has an accounting period that ends on 31 December.
Your global parent's GPFS for the accounting period ending on 31 December 2016 is considered to be for the financial year most closely corresponding to your income year ending on 30 June 2017.
End of example