New reporting to ‘shine a light’ on subsidiary tax arrangements, says assistant minister
Consolidated entity disclosure statements will begin to provide important information on how public companies structure their subsidiaries from this week onwards, says Assistant Minister Andrew Leigh.
The requirement for public companies to provide a consolidated entity disclosure statement in their financial reports applies for the first time for the 30 June 2024 year-end reporting period.
The new reporting requirements were legislated as part of multinational tax transparency measures passed in March this year.
The legislation requires public companies to provide information about their subsidiaries as part of their financial reports through a consolidated entity disclosure statement.
Assistant Minister for Competition, Charities and Treasury, Dr Andrew Leigh, said the new statement would hold companies to account, particularly large corporate groups, on their corporate structure and whether they are operating with opaque or atypical tax arrangements.
"From [this] week, Australians will start to see how public companies structure their subsidiaries, including for tax purposes," said Assistant Minister Leigh. The reporting and audit requirements for the consolidated entity disclosure statement are purposefully intended to apply a higher standard than for the listing of material entities in a company’s financial statements, he added.
This would still apply to the other annual report elements in line with current accounting and auditing standards.
"This acknowledges that the consolidated entity disclosure statement is a separate part of a company’s financial report and is intended to shine a light on company structures, the number of subsidiaries and where they are located," Assistant Minister Leigh said.
The statement will include information such as the names of each entity; whether the entity was a body corporate, partnership or trust; if the entity is a body corporate, the public company’s percentage of ownership; and the tax residency of each of the entities.
As company reporting dates near, Assistant Minister Leigh said ASIC and the Auditing and Assurance Standards Board would consider if public guidance is required.
"Entities will be able to determine tax residency in accordance with the Commissioner of Taxation’s existing public guidance," he said. "Entities that apply this guidance in good faith may declare that the tax residency status of a subsidiary is true and correct for the purposes of the new consolidated entity disclosure statement."
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