In brief – Winter 2014

New financial reporting requirements for companies

Companies with reporting periods commencing on or after 1 April 2014, who have:

  • annual revenue of $30 million or less, or
  • assets of $60 million or less are no longer required to prepare general purpose financial statements (eg: FRS, IFRS).

Instead, companies will now be required to prepare special purpose financial reports to minimum requirements set by Inland Revenue.  Inland Revenue will not be preparing a model template for this, but have issued minimum requirements in an Order in Council.

For those who want to ‘step-up’ from Inland Revenue’s minimum requirements, the New Zealand Institute of Chartered Accountants is currently drafting a Special Purpose Financial Reporting Framework for For-Profit Entities, which will set out reporting standards to follow.

It is set to be the go-to guide for companies who wish to have a quality set of financial statements, without reporting under the more complex International Financial Reporting Standards.

Changes to financial statement filing requirements for companies

The Financial Reporting (Amendments to Other Enactments) Act 2013 has amended the requirements for financial reporting requirements by companies in the Companies Act 1993.

Companies that now have to file their financial statements with the Companies Office are:

  • Large companies (assets >$60 million or revenue >30 million)  with 25 percent or more overseas ownership
  • Large overseas companies (assets > $20 million or revenue >$10 million) .
  • There are some exemptions to the above under section 207D(2) of the Companies Act 1993.

If you are required to report under the Companies Act, you must file audited financial statements within five months of balance date.

Companies who are issuers now report under the Financial Markets Conduct Act 2013.

Changes to fringe benefit tax (FBT) for registered charities

From 1 April 2014, some Charities may no longer be exempt from paying FBT.  If a charity provides short-term charge facilities (including petrol or grocery vouchers) to an employee above a threshold, the charity must pay FBT.

This threshold is given per employee and is the smaller amount of:

  • 5 percent of an employee’s salary or wages for the year, or
  • $1,200 for the year.

If a charity provides short term charge facilities to an employee, the charity will need to ensure it is registered for FBT, files an FBT return, and pays the FBT owing.

For-profit entities and new legislation in effect

In November 2012, the External Reporting Board (XRB) and the New Zealand Accounting Standards Board (NZASB) issued a package of standards separating the NZ IFRS standards into those applicable for for-profit entities and public benefit entities (PBEs).

The ‘for-profit package’ suite of standards is in place and is being rolled out at intervals. A key standard of this being XRB A1, which establishes a tier structure and related accounting standards that will apply to each tier for profit periods beginning on or after 1 December 2012.

Briefly, entities initially default to Tier 1 and may elect into Tiers 2, 3 or 4 subject to meeting the applicable criteria of each tier. It should be noted that Tiers 3 and 4 have been designated as “temporary tiers”, and will be removed for periods beginning on or after 1 April 2015. Entities in these categories that are still required to comply with GAAP, will default to Tier 2 at that time. These entities are free to adopt Tier 2 designation before then.

Winter 2014

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