The standards for companies preparing financial statements have changed for income years from April 1, 2014. Most companies with annual revenue of $30 million or less and assets of $60 million or less are no longer required to prepare general purpose financial reports.
They can continue to provide these if they wish, although they will be required to prepare simplified statements.
For income years starting on April 1, 2014 and later, companies (including Look-Through Companies) with annual revenue of $30 million or less, and assets of $60 million or less must prepare financial accounts that meet our minimum financial reporting requirements.
These thresholds apply to all companies in a group where the parent company is incorporated in New Zealand.
For subsidiaries of multi-national companies the levels are (a) annual revenue of $10 million or less, and (b) assets of $20 million or less.
Subsidiaries of New Zealand companies that prepare consolidated general purpose financial reports must prepare their own financial accounts that meet our minimum financial reporting requirements.
Higher standard
The following companies are required to prepare financial statements to a higher standard of accounting (1) Large companies with income of more than $30 million or assets of more than $60 million (2) New Zealand subsidiaries of multi-nationals with income of more than $10 million or assets of more than $20 million (3) Issuers (4) Companies with ten or more shareholders (unless they opt out (5) Companies with fewer than ten shareholders who exercise this option
These companies must prepare general purpose financial reports using the standards mandated by the External Reporting Board. Separate financial accounts need not be prepared for us.
Some exemptions
Small companies are not required to prepare financial accounts if during the income year they are not part of a group of companies, have not derived income in excess of $30,000, and have not incurred expenditure in excess of $30,000.
Tax records must be kept to calculate taxable income, expenses, and GST (if registered).
If a small company is also an employer, records for employment-related taxes should be maintained.
Your accountant or tax agent can tell you more about financial reporting. You can also visit our website www.ird.govt.nz for more details.
Free Workshops
If you are in business, you may like to attend one of our free tax seminars or workshops held in various parts of the country. Please visit our website for details (www.ird.govt.nz).
Abdul Rafik is Inland Revenue’s Community Compliance Officer based in Auckland. He will answer your queries, which may be emailed to venkat@indiannewslink.co.nz
