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Kristen Haines


As part of the 30 June 2024 annual reporting, public companies will now have to prepare a new consolidated entity disclosure statement. 

The consolidated entity disclosure statement will be required by all public companies (both listed and unlisted) who are required to prepare annual financial reports under the Corporations (Act 2001). It will apply to those companies whether or not they prepare consolidated financial statements.

The key additional information which this statement provides beyond that which is included in the financial statements is the tax residency of all entities within the Group. The rationale behind requiring this statement is part of a worldwide drive to increase tax transparency. 

Publicly disclosing the tax residency of each member of the group gives users of the financial report a clearer indication of the jurisdictions where the group is subject to tax. It may also increase the public scrutiny of actions that large multinational organisations are taking to minimise their taxable positions and provide greater clarity to users of how they manage their tax affairs. There is, however, no requirement to disclose the amount of tax that is payable in each jurisdiction. This is part of a suite of regulations that the government is currently undertaking to minimise tax avoidance and increase tax transparency.

Required disclosures

The amendments are applicable for years beginning on or after 1 July 2023, so for most public companies this will be the 30 June 2024 annual reports. In particular the consolidated entity disclosure statement will need to provide the details for each entity in the group, specifically:

  • The name and structure (company, partnership, trust etc)
  • Country of incorporation
  • Percentage owned by the group
  • Tax residency
  • Whether the entity was a trustee or a trust within the consolidated entity, partner in a partnership or a participant in a joint venture. 

The consolidated entity disclosure statement will be similar to the existing note in the financial statement that outlines the subsidiaries in the group. However, there will be some differences as all subsidiaries are required to be included in the consolidated entity disclosure statement. It will include all dormant entities and entities that might otherwise be considered immaterial and therefore be excluded from the notes to the financial statements and also requires information regarding the tax residency of an entity which is not typically included in the financial statements. If your public company does not prepare consolidated financial statements, then the consolidated entity statement can be merely a statement to that effect.

There will be a replication of this information between the consolidated entity disclosure statement and the notes to the financial statements and it will not be possible to cross reference between the two to mitigate this. The information required in the notes to the financial statements is required to be included within the financial statements and the notes, in order to be in compliance with the Australian Accounting Standards (AASBs) and the International Financial Reporting Standards (IFRS). It is not possible to locate that information elsewhere and reference across to it. Similarly, the Corporations Act (2001) is explicit as to what must be included in this separate consolidated entity disclosure statement, and therefore it would not be appropriate to merely cross reference that back to the notes to the financial statements.

Directors’ responsibilities

The Director’s declaration will also be expanded to include a statement that in the directors’ opinion the consolidated entity disclosure statement is ‘true and correct’. This is a stronger statement than that required for the financial statements where directors are only required to declare that the financial statements are ‘true and fair’. Accordingly, Directors will need to ensure that they are comfortable with the information included in the statement, in particular the tax residency of each entity in the Group. For listed companies, the declaration made by the CEO and CFO will also be similarly expanded.

As the Consolidated Entity Statement is part of the annual financial report, it is also subject to audit requirements and the audit opinion will now also cover the consolidated entity disclosure statement. 

Actions to take now

Whilst this is an additional statement that needs to be prepared, in theory it should not involve significant additional work, as the Company should already have all the information required to be included in the consolidated entity disclosure statement. However, due to the fact that the directors are now signing a declaration over this information, and the auditor have to provide the opinion over it, you may find that there is increased scrutiny over the tax residency of your subsidiaries, and the need to explain and articulate their tax residencies that you have not previously had to do. 

To simplify the process come year-end, we recommended that you do the following now:

  • Ensure you have a complete listing of all entities in the group including dormant entities
  • Compile clear documentation of the tax residency and other details to be disclosed of each of the entities in your group

Helpfully, the information required generally tends to be relatively stable, and therefore can principally be prepared in advance of year-end, unless there are any changes in group structure. This will minimise the amount of work that is required to prepare this whilst you are also trying to prepare the annual financial statements. 

Further Assistance

If you have further questions on the consolidated entity disclosure statement, please reach out to your local Moore Australia contact. Our Tax and business advisors are well placed to assist you in collating this information and confirming the tax residency of your subsidiaries, whilst your auditor can have discussions with you regarding what information they are going to require. 

Please note at the time of writing, the legislation has passed both houses of parliament, but is still awaiting final Royal Assent by the Governor-General, although there is no reason to believe that this process will not be completed in the next couple of weeks.