13 November 2013
Feedback sought on minimum financial reporting for companies
Minister of Revenue Todd McClay announced the release today of an Inland Revenue tax policy officials’ paper which seeks public feedback on the minimum financial reporting requirements that should apply for most companies.
The proposals in the paper will apply to most small and medium-sized companies which have no more than $20 million in turnover or $60 million in assets. Under reforms set out in the Financial Reporting Bill, these companies will no longer be required to prepare general-purpose financial statements. Instead, the Government has agreed these companies will in future prepare simplified statements to a minimum requirement determined by Inland Revenue, which is the biggest user of financial statements.
“The officials’ issues paper, Minimum financial reporting requirements for companies, sets out proposals for special-purpose financial statements, based on everyday accounting principles”, says Mr McClay.
Minimum requirements suggested in the paper include:
- that statements be based on double-entry cost-based accrual accounting;
- that they have a balance sheet and profit and loss, together with supporting notes and a statement of accounting policies and changes;
- they include a schedule of certain related-party transactions; and
- if necessary, include a financial statements to taxable income reconciliation.
The paper suggests the minimum reporting requirements would apply to relevant companies from 1 April 2014. The present general-purpose requirements will be turned off at the same date.
The major exception to these proposals for small and medium-sized companies will be the New Zealand subsidiaries of multi-nationals whose turnover exceeds $10 million or whose assets exceed $20 million. As recently announced, these companies will still be required to prepare general-purpose financial statements that will continue to be made public.
“It is important for companies likely to be affected to provide feedback on the suggested minimum reporting requirements. Compliance costs will be an important consideration in determining the final requirements”, says Mr McClay.
The paper, Minimum financial reporting requirements for companies, is available on Inland Revenue’s tax policy website, at http://taxpolicy.ird.govt.nz/publications/year/2013
Submissions close on Friday 20 December.
Media contact: Rob Eaddy 0274 596 200