The size test to determine whether a proprietary company is large or small has been revised in the Corporations Act (2001).

The size test to determine whether a proprietary company is large or small has been revised in the Corporations Act (2001). ASIC Class order [CO 07/0505] Variation and revocation of financial reporting instruments reflects the changes in Class order [CO 98/0096], Class order [CO 98/0098] and Class order [CO 02/1432].

A proprietary company is considered large when it meets two of the following three criteria:

  • consolidated revenue for the financial year is $25 million or more
  • consolidated gross assets at the end of the financial year is $12.5 million or more
  • company and controlled entities have 50 or more employees at the end of the financial year

If this test is not met, it is considered a small proprietary company.

Generally, a small proprietary company is not required to prepare and lodge financial reports unless it is controlled by a foreign entity.

Small proprietary companies which are foreign controlled or are registered foreign companies may have additional relief.

Class order [CO 98/0098] is available to small proprietary companies that are not part of a large group. ?Large groups? are aggregations of a proprietary company, its Australian-based siblings and their controlled entities. The large group test applies the revised amounts from the large/small test indicated above.

Relief under [CO 98/0098] is normally available where directors have resolved to take advantage of the relief no more than three months before the commencement of the financial year and notice has been lodged for the public record before the commencement of the financial year using Form 384.

Class order [CO 02/1432] also provides relief from the requirement to lodge financial statements provided the registered foreign company is not part of a large group or is not controlled by a parent which consolidates the registered foreign company for the entire financial year and lodges its financial statements with ASIC.

The large group test is the same as the test in [CO 98/0098]. This relief is only available if the registered foreign company is not required to prepare financial statements in its place of origin.

Class order [CO 98/0096] permits an entity to synchronise its financial year with that of its ultimate foreign parent entity in some instances. Consequential legislative amendments apply to this class order.

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