Audit Lowe Down – Large proprietary limited – are you one? Tips and traps for your assessment
Lowe Lippmann Chartered Accountants
Large proprietary limited – are you one? Tips and traps for your assessment.
In Australia, being classified as a large proprietary limited company means that you have to prepare, and lodge audited financial statements with ASIC under the Corporations Act 2001 (the Act), however many companies are not necessarily applying the thresholds appropriately.
A proprietary company is large if it meets at least 2 of the following thresholds:
- Consolidated revenue ≥ $50 million
- Consolidated gross assets ≥ $25 million
- 100 or more employees.
These thresholds seem simple, however some points to note:
- The calculations must be performed applying ALL accounting standards so even if you are preparing special purpose financial statements, then you will need to assess these thresholds as if you were applying all standards, including:
- AASB 16 Leases – this standard would add a right of use asset to your balance sheet potentially significantly increasing your gross assets.
- AASB 10 Consolidated Financial Statements – if you have controlled entities then the inclusion of their income statement and balance sheet may significantly increase each of the thresholds.
- AASB 128 Investments in Associates and Joint Ventures / AASB 11 Joint Arrangements – if you have entities over which you have significant influence or joint control then applying equity accounting or including your share of assets and revenue would affect the thresholds.
- In determining the number of employees, the Act is clear that it is all full-time and part-time employees (on a pro-rata basis), however casual employees need to be considered. For example, are they genuinely casual with varying hours / shifts each week or are they in substance a permanent member of your team but just employed on a casual basis.
- The thresholds need to be met at the end of the financial year and therefore entities should track their performance during the year so they are aware if they will meet the definition of a large proprietary company at year end.
Please do not hesitate to contact your Lowe Lippmann Relationship Partner if you wish to discuss any of these matters further.
Liability limited by a scheme approved under Professional Standards Legislation
A strategy often used to reduce taxable income (and, in turn, tax payable) in an income year is to bring forward any expected or planned deductible expenditure from a later income year. However, any individuals with potentially reduced income for the 2026 tax season may want to instead consider deferring any deductible expenditure (if possible).
Many business clients like to review their tax position before the end of the income year and evaluate any strategies that may be available to legitimately reduce their tax. Traditionally, year-end tax planning for profitable small businesses is based around accelerating deductions and deferring income. The Year End Checklist in the link below explains some common strategies that may be considered for all business taxpayers.
Year-end tax checklists for Individuals and Businesses We have recently prepared two Year End Checklists which help explain some common strategies that may be considered for Individual and Businesses taxpayers. Year End Checklist for Individuals – click here Year End Checklist for Businesses – click here
