Treasury Laws Amendment (Making Multinationals Pay Their Fair Share - Integrity and Transparency) Act 2024

EXECUTIVE SUMMARY

On 8 April 2024, the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share—Integrity and Transparency) Act 2024 (“the Act”) received Royal Assent. The Act amends the Corporations Act 2001 (the “Corporations Act”) to require Australian public companies to disclose information about their subsidiaries in their annual financial reports by way of a “Consolidated Entity Disclosure Statement”. 

Who is affected?

The Act affects all Australian public companies (listed and unlisted) that report under Chapter 2M of the Corporations Act.

What is required?

The Act amends s295 of the Corporations Act to require Australian public companies that are required by Australian Accounting Standards to prepare consolidated financial statements to disclose, by way of a Consolidated Entity Disclosure Statement, the following information about entities within the consolidated entity:

• the names of each entity at the end of the financial year;
• whether the entity was a body corporate, partnership or trust at the end of the financial year;
• whether at the end of the financial year, the entity was any of the following:
  • a trustee of a trust within the consolidated entity;
  • a partner in a partnership within the consolidated entity; or
  • a participant in a joint venture within the consolidated entity.
• if the entity is a body corporate, where the entity was incorporated or formed;
• if the entity is a body corporate, the public company’s percentage ownership (whether directly or indirectly) of each of those entities that are body corporates at the end of the financial year; and
• the tax residency of each of those entities during the financial year.

If, however, the accounting standards do not require the public company to prepare consolidated financial statements, a statement is made to that effect.

Directors must declare whether, in their opinion, the Consolidated Entity Disclosure Statement is true and correct. Additionally, this declaration must be made by the Chief Executive Officer and the Chief Financial Officer where the public company is listed on a securities exchange.

Tax legislation defines “true and correct” as being accurate and not misleading. In our view, it conveys the intention of complete and accurate disclosures being made in the Consolidated Entity Disclosure Statement without application of quantitative or qualitative materiality.

The Consolidated Entity Disclosure Statement forms part of an entity’s financial report and is therefore subject to the existing audit framework under the Corporations Act.

When is it effective?

The Act applies to financial reports for financial years commencing on or after 1 July 2023.

The text of the Bill which received royal assent can be located here.

FURTHER INFORMATION

If you wish to discuss any of the information included in this Technical Accounting Alert, please get in touch with your Grant Thornton Relationship Partner or a member of the National Assurance Quality Team at national.assurance.quality@au.gt.com.