New disclosure requirement for Public Companies – Consolidated Entity Disclosure Statement (CEDS)

On 27 March 2024, changes to Part 2M of the Corporations Act 2001 were passed in the Houses of Parliament. Details of these amendments are contained in the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share – Integrity and Transparency) Act 2024 and their purpose is to facilitate enhanced multinational tax transparency.

The Treasury Laws Amendment (Making Multinationals Pay Their Fair Share – Integrity and Transparency) Act 2024 requires the inclusion of a “Consolidated Entity Disclosure Statement” (CEDS) in the annual report, for all consolidated entities with a reporting period beginning on or after 1 July 2023.

Contents of the Consolidated Entity Disclosure Statement

The required disclosures, some of which overlap with those already required to be disclosed in the annual report under AASB12 Disclosures of Interests in Other Entities, must be included in a separate statement within the annual report.

Items to be included are:

For public companies required by the accounting standards to prepare financial statements in relation to a consolidated entity, the CEDS must include the following for all entities (including those that are dormant and/or immaterial) that were part of the consolidated entity, at the end of the financial year:

• the entity’s name at that time;
• whether the entity was a body corporate, partnership, or trust;
• whether the entity was
  • a trustee of a trust within the consolidated entity,
  • a partner in a partnership within the consolidated entity,
  • a participant in a joint venture within the consolidated entity.
• the place of incorporation of the entity, if it is a body corporate
• the percentage of the entity’s issued share capital, if relevant, (excluding any part that carries no right to participate beyond a specified amount in a distribution of either profits or capital) that was held, directly or indirectly, by the public company at that time;
• whether the entity was an Australian resident (as defined in the Income Tax Assessment Act 1997) or a foreign resident (within the meaning of that Act);
• if the entity was a foreign resident as described in item (vi) – a list of each foreign jurisdiction in which the entity was, at that time, a resident for the purposes of the law of the foreign jurisdiction relating to foreign income tax (within the meaning of that Act).

For public companies not required by the accounting standards to prepare a consolidated financial report, a statement to that effect must be included.

Director’s Declaration inclusion re CEDS

In addition to the above, the director’s declaration must now include a statement that the information included in the CEDS is “true and correct”. This is a more definitive and onerous requirement than the “true and fair” opinion for the remainder of the financial report. Having the CEDS as a separate statement facilitates the isolation of the information to which the “true and correct” opinion of the directors pertains.

If you require any assistance in understanding the information above, please contact your Hall Chadwick QLD advisor.