Guidance on providing general purpose financial statements

A corporate tax entity that is a country-by-country reporting entity (CBC reporting entity) with an Australian presence must give us a general purpose financial statement (GPFS). They do not have to provide a GPFS if one has already been lodged with the Australian Securities and Investments Commission (ASIC).

For income years starting on or after 1 July 2016 but before 1 July 2019, this lodgment obligation applies to corporate tax entities that are also significant global entities (SGEs).

Note: All legislative references in this document are to the Taxation Administration Act 1953 unless otherwise stated.

Find out about:

• Who must give us a GPFS
• Best practice
• How to prepare a GPFS
• How to give us your GPFS
• When to give us your GPFS
• Administrative arrangements
• Worked examples

See also:

• Country-by-country reporting entities

Who must give us a GPFS

You must give us a GPFS if you:

• are a corporate tax entity (that is, a company, corporate limited partnership or public trading trust) for the income year
• are a CBC reporting entity for the income year
• are an Australian resident or a foreign resident operating an Australian permanent establishment (PE), at the end of the income year
• don't lodge a GPFS with ASIC for the financial year most closely corresponding to the income year within the time provided under subsection 319(3) of the Corporations Act 2001 (Corporations Act).

You must give us a GPFS regardless of whether you are a reporting entity under Australian Accounting Standards.

You are considered to have lodged a GPFS with ASIC if you lodge it with an operator of an eligible financial market, as in the ASIC Corporations (Electronic Lodgment of Financial Reports) Instrument 2016/181.

Any relief or exclusion provided under the Corporations Act or by ASIC in relation to your obligation to prepare or lodge financial reports doesn't affect your obligation to give us a GPFS (GPFS obligation). For example, you must give us a GPFS if you are either a:

• grandfathered large proprietary company relieved from lodging financial reports under the Corporations Act
• head company of a multiple entry consolidated (MEC) group that is otherwise relieved by ASIC from preparing financial reports under Part 2M.3 of the Corporations Act.

Summary of your obligation to give us a GPFS

To assist your understanding of your GPFS obligation, the most common scenarios are set out in Table 1.

Table 1: Common scenarios

Type of scenario	GPFS obligation
1. You: lodge a GPFS with ASIC within the stipulated time, or are a subsidiary member of an Australian tax consolidated group or a MEC group, except where you enter or leave that group part-way through the income year.	None. See also: Administrative relief for late lodgment with ASIC Members of tax consolidated groups or MEC groups
2. You: are required to lodge a GPFS with ASIC, but you do not do so lodge special purpose financial statements (SPFS) with ASIC are required to prepare, but not lodge financial reports with ASIC (for example, grandfathered large proprietary companies), or are otherwise relieved from preparing financial reports by ASIC because your parent lodges consolidated financial statements prepared in accordance with Australian Accounting Standards (incorporating your financial position and performance) with ASIC.	You must give us a GPFS prepared in accordance with Australian Accounting Standards. See also: How to prepare a GPFS
3. You are an Australian resident for tax purposes, and you are: not subject to the Corporations Act (for example, corporate limited partnerships) not subject to Part 2M.3 of that Act (for example, certain small proprietary companies), or otherwise relieved from preparing financial reports by ASIC because       you are a small proprietary company controlled by a foreign company that is not part of a large group, or your foreign parent lodges consolidated financial statements with ASIC, which are prepared in accordance with accounting standards applicable in your parent's home country.	You must give us a GPFS (stand-alone or consolidated) prepared in accordance with Australian Accounting Standards or other commercially accepted accounting principles (CAAP). See also: What is CAAP (where Australian Accounting Standards don't apply)
4. You are a foreign resident operating a PE and did not lodge a GPFS with ASIC (for example, registered foreign companies).	In most circumstances, you are required to give us a GPFS prepared in accordance with CAAP. See also: Foreign residents conducting a business through a permanent establishment

Best practice

You may have options in how to comply with your GPFS obligation. For example, you may comply by providing a GPFS prepared using Tier 2 Reduced disclosure requirements (see AASB 1053 Application of tiers of Australian Accounting Standards). Alternatively, you may comply by providing either a GPFS for the Australian sub-group of which you are part, or the GPFS of your offshore parent.

In determining which option to adopt, we suggest you take into account how each option would best achieve the public transparency of your Australian affairs. In some circumstances, a GPFS prepared in accordance with accounting standards may give a very limited perspective of the Australian operations of the whole tax consolidated or MEC group. For example:

• In cases involving tax consolidation – the accounting standards may only allow the head company to prepare a GPFS for itself.
• In cases involving MEC groups – the accounting standards may also only require the head company to consolidate entities that it controls.

If either option applies to you, you may want to consider preparing consolidated GPFS for the tax consolidated group or including an effective consolidation or aggregation of the operations of your entire MEC group. In the latter case, a GPFS with such an inclusion would be prepared using consolidation principles (such as AASB 10 Consolidated Financial Statements). This will produce a set of financial statements that include all the members of the MEC group. Such financial statements are referred to as 'combined financial statements' in the IFRS Conceptual Framework for Financial Reporting March 2018.

Even though your GPFS is not required to be audited, we recommend you keep evidence to demonstrate your GPFS has been prepared in accordance with Australian Accounting Standards or CAAP where required. We consider it is best practice to have it audited wherever possible as a way of ensuring that you have reliable evidence about its preparation. You should give us the audited version if you are required to have your GPFS, or GPFS equivalent, audited under another law.

Where a practitioner is engaged to compile financial statements under a compilation engagement, they are to prepare them with professional competence and due care, and in accordance with the applicable financial reporting framework. A GPFS prepared under a compilation engagement will be at lower risk of non-compliance with the applicable accounting standards. However, as the practitioner is not required to verify the accuracy or completeness of the information provided by the client, it will not benefit from the same level of assurance as an audited GPFS.

See also:

• AASB current standardsExternal Link

How to prepare a GPFS

You have a Part 2M.3 obligation

If you have an obligation to prepare financial reports under Part 2M.3 of the Corporations Act, your GPFS must be prepared in accordance with accounting standards, as defined in the Corporations Act, and the authoritative pronouncements of the Australian Accounting Standards Board (AASB).

You must give us a GPFS prepared using Tier 1 reporting requirements if you have 'public accountability' as defined in AASB 1053. If you are eligible to adopt Tier 2 reporting requirements, you may lodge a GPFS prepared on this basis. Alternatively, you may choose to use Tier 1 reporting requirements.

You don't have a Part 2M.3 obligation

If you don't have a Part 2M.3 obligation, your GPFS must be prepared in accordance with CAAP.

You need to prepare your GPFS in accordance with the listed CAAP. To check whether one of the listed CAAP applies in your circumstances, see What is CAAP (where Australian Accounting Standards don't apply).

A listed CAAP will apply in your circumstances. For example, if you use that CAAP to prepare your financial statements for general business purposes or to meet your other regulatory obligations.

If none of the listed CAAP applies in your circumstances, you may determine whether some other set of accounting standards is acceptable as CAAP. Make sure you follow the further guidance in What is CAAP (where Australian Accounting Standards don't apply).

You are a member of a group of entities

If you are a member of a group of entities consolidated for accounting purposes as a single group, your GPFS must relate either to you (a stand-alone GPFS), or you and some or all of the other members of your accounting consolidated group (a consolidated GPFS).

A 'group of entities consolidated for accounting purposes as a single group' refers to individual entities within a group of entities whose financial accounts are consolidated in accordance with the relevant accounting standards, in such a way that the assets, liabilities, equity, income, expenses and cash flow of the parent entity and the other members of the group are presented as those of a single economic entity.

An entity is a member of such a group if it is the parent entity or one of the entities the parent controls and its accounts are included in the consolidated financial statements of the group consistent with AASB 10 Consolidated Financial Statements or equivalent standards.

Paragraph 3CA(5)(b) provides an option for you to give us a stand-alone or consolidated GPFS (including a sub-group consolidated GPFS). Whether the option is available to you depends on:

• where you as an entity, to which section 3CA applies, are situated within your group, and
• the requirements of all of the relevant accounting standards that are applicable to you (bearing in mind the relevant consolidation standard may only permit a 'look down' the control chain approach).

Nonetheless, if you are subject to Part 2M.3, your GPFS must comply with all of the relevant requirements of the Australian Accounting Standards. For example, if you are a parent entity and you're not exempt under AASB 10, you may choose to give us a consolidated GPFS you have already prepared. However, in these circumstances it is also open to you to give us a stand-alone GPFS as long as it complies with AASB 127 Separate Financial Statements.

If you're not subject to Part 2M.3 and you choose to give us a consolidated GPFS, your GPFS must be prepared in accordance with CAAP. This may include one of the accounting standards specifically listed in the guidance below that are considered to be acceptable as CAAP. A CAAP you use must be a CAAP that applies in your circumstances, which may include the accounting standard that has been applied by your parent.

If none of the listed CAAP is applicable in your circumstances, then you can determine whether the accounting standards you apply are CAAP (see What is CAAP (where Australian Accounting Standards don't apply).

If you and/or your parent (whether immediate, intermediary or ultimate parent) use different accounting standards when preparing financial statements, you may consider that more than one CAAP applies in your circumstances. In such instances, a consistent CAAP must be used in subsequent years for preparing your GPFS except where that CAAP no longer applies.

 

Effect of relief from preparing financial reports

If you are relieved by ASIC – through an Instrument or Class Order – from preparing financial reports under Part 2M.3 of the Corporations Act, you must prepare your GPFS in accordance with Australian Accounting Standards.

If you are relieved by ASIC from preparing financial reports for other reasons than that outlined above, you must prepare your GPFS in accordance with CAAP.

Information a GPFS must disclose

Australian Accounting Standards stipulate what information a GPFS discloses and how it is presented. A GPFS is defined in AASB 101 Presentation of Financial Statements as 'those intended to meet the needs of users who are not in a position to require an entity to prepare reports tailored to their particular information needs', and needs to comply with the requirements of all applicable standards.

A GPFS prepared in accordance with CAAP should provide a structured representation of the financial position, financial performance and cash flows of the entity. It should provide information that is useful to a wide range of users in making economic decisions. It should also show the results of management’s stewardship of the resources entrusted to it.

To meet this objective, the financial statements should be based on recognition and measurement criteria that faithfully represent the entity's financial performance and position, and provide information about the entity’s:

• assets
• liabilities
• equity
• income and expenses, including gains and losses
• contributions by and distributions to owners in their capacity as owners
• cash flows.

This information, along with other information in the notes to the financial statements, should assist users of those statements. For example, in predicting the entity’s future cash flows, including their timing and certainty.

You only need to give us information such as a director's declaration or a director's report where that declaration or report is required under the relevant CAAP.

Financial year most closely corresponding to the income year

If you are subject to Chapter 2M of the Corporations Act, ‘financial year’ in section 3CA means the financial year as defined in section 323D of that Act. This is usually a period of 12 months, not necessarily starting on 1 July.

For all other corporate tax entities, for the purposes of section 3CA, your financial year will be identical to the annual accounting period you have adopted. Your accounting period and the 'financial year' may not necessarily start on 1 July and your financial year may not necessarily align with your income year.

If you have a section 3CA obligation, you must give the Commissioner a GPFS for the 'financial year most closely corresponding to your income year'. Generally, this will be the financial year most recently concluded on or before the end of the income year.

 

What is CAAP (where Australian Accounting Standards don't apply)

We accept the following accounting standards as being 'commercially accepted principles relating to accounting' for the purposes of subparagraph 3CA(5)(a)(ii):

• International Financial Reporting Standards (IFRS)
• accounting standards that are IFRS-compliant, as published on IFRS.org (such as Australian Accounting Standards or IFRS as adopted by the European Union)
• US generally accepted accounting principles (GAAP)
• accounting standards that are accepted by ASX Limited from time to time for the purposes of its Listing Rules.

Where the accounting standards listed above do not apply in your circumstances, the principles and guidance provided in paragraphs A8, and paragraphs 3 and 4 of Appendix 2 of the Auditing Standard ASA 210 will assist you in determining whether the accounting standard that has been applied to prepare your GPFS is acceptable as CAAP.

Foreign residents conducting a business through a permanent establishment

If you are a foreign resident conducting a business through an Australian PE, your GPFS must be prepared in accordance with CAAP. They must relate to you and incorporate your Australian PE results, unless you are required to prepare financial statements under subsections 601CK (5)-(6) of the Corporations Act. In the latter case, you must prepare your GPFS in accordance with Australian Accounting Standards.

The GPFS you give us can be a stand-alone GPFS for you and your Australian PE or for the group or part of the group of which you, including your Australian PE, are a member. A PE is not a corporate tax entity or an entity. Consequently, your GPFS cannot be a stand-alone GPFS for only your Australian PE. Despite this, we consider it best practice for your GPFS to include separate measurement and disclosure of your Australian PE. Any separate measurement and disclosure of your PE should be prepared in accordance with the accounting standards you have adopted to prepare your GPFS.

A GPFS denominated in a currency other than Australian dollars does not need to be re-denominated into Australian dollars.

You don't need to give us a GPFS if you are a registered foreign company and lodge a GPFS with ASIC within the time provided in subsection 319(3) of the Corporations Act.

If the accounting standards applicable to you in your country do not describe a 'GPFS', we will accept that you have lodged a GPFS with ASIC if an appropriately qualified and independent person, such as your auditor, verifies those statements are in substance a GPFS. You don't need to provide us with the verification but you need to be able to produce it on request.

Members of tax consolidated groups or MEC groups

If you are a subsidiary member of a tax consolidated group or MEC group, you aren't required to give us a GPFS. However, if you join or leave a tax consolidated group or a MEC group part-way through an income year, you must give us a GPFS where you:

• meet the conditions that give rise to a GPFS obligation, and
• have an obligation to lodge an income tax return because you were not a member of a tax consolidated or MEC group for the entire year and were a taxpayer for part of the income year.

How to give us your GPFS

You are required to give us your GPFS in the approved form. To be in the approved form, you need to lodge it online by uploading it via Online services for businessExternal Link or Online services for agentsExternal Link. We do not accept paper or email lodgments. For more information on electronic lodgment, visit our Online services page.

To lodge using:

• Online services for business, select Lodgements then Reports and forms      
  • select General purpose financial statements then Add
  • complete all mandatory details and select Submit.
   
• Online services for agents at the Client summary      
  • select Lodgment then Client forms
  • select General purpose financial statements then Add
  • complete all mandatory details.
   

Your GPFS must be in English or be an English translation.

Your GPFS should be in PDF format. We will reject any PDF documents containing encrypted data, active content (for example, JavaScript, PostScript), external references, and PDF documents with attached objects or executables. The maximum file size allowable is currently 20MB.

If you are a member of a group consolidated for accounting purposes, you need to give us a GPFS even if another member of your group also gives us the same GPFS.

When to give us your GPFS

You need to give us your GPFS on or before the day you are required to lodge your income tax return. Your GPFS must be for the financial year most closely corresponding to your income year.

If you are unable to meet GPFS lodgment deadlines due to exceptional and unforeseen circumstances, you can request a GPFS lodgment extension by emailing us at GPFS@ato.gov.au.

Application of failure to lodge penalties

If you fail to give us a GPFS in the approved form on or before the due date for the lodgment of your income tax return, you may be liable to failure to lodge on time penalties. These are significantly higher for SGEs than for other entities. These penalties may apply irrespective of any penalty imposed under the Corporations Act.

See also:

• Significant global entities – penalties

Administrative arrangements

Administrative relief for late lodgment with ASIC

We will accept you have satisfied your GPFS obligation where you notify us before the due date for the lodgment of your income tax return you have lodged a GPFS with ASIC after the time provided in subsection 319(3) of the Corporations Act, but before the due date for lodgment of your income tax return.

This relief also applies to foreign entities where they are required to prepare and lodge financial statements under subsections 601CK(5), 601CK(5A) or 601CK(6) of the Corporations Act.

To access this administrative relief, email us with the following details:

• entity name
• Australian business number (ABN) or tax file number (TFN)
• balance date of your income tax year
• due date of your income tax return
• due date for the lodgment of your GPFS with ASIC
• date you lodged your GPFS with ASIC.

Approach to government-related entities

Government-related entities that are tax exempt are not required to lodge a GPFS if they don't lodge an income tax return or are subject to the National Tax Equivalent Regime.

Government-related entities as defined by A New Tax System (Goods and Services Tax) Act 1999 can be excluded from the requirement to provide a GPFS. This is only if the Commissioner gives them a notice in writing stipulating that section 3CA does not apply to them for one or more of the applicable income years. The Commissioner, in reaching this decision, will consider if it is appropriate to do so upon receiving a request. Government-related entities can request that the Commissioner consider their circumstances by writing to GPFS@ato.gov.au.

Worked examples

Entering an accounting and tax consolidated group

Exiting an accounting and tax consolidated group

Country-by-country reporting entities with an Australian presence must give us a general purpose financial statement (GPFS).