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Clarity in financial reporting – September 2021 monthly newsletter

Listed entities must announce JobKeeper information to the market, accounting for the R&D tax offset and more

Our monthly Clarity in financial reporting newsletter informs you of key focus areas in financial reporting for the month: actions, developments, and dates.

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Key actions

Listed entities must announce JobKeeper information to the market

Key actions: All Australian listed entities that participated in the JobKeeper scheme, whether or not information has been disclosed in financial reports or elsewhere, must ensure they comply with new legislative requirements to announce prescribed details to the market.

What’s happened?

On 2 September 2021, Federal Parliament passed the Treasury Laws Amendment (2021 Measures No. 2) Bill 2021. As part of negotiations, an additional schedule was included in the Bill to require Australian listed entities to announce information to the market about JobKeeper payments. This is effected through a new Division being included in Part 2M.3 of the Corporations Act 2001. The Bill received Royal Assent on 13 September 2021.

What is required to be disclosed?

All listed entities that have received a JobKeeper payment, including through a subsidiary, must provide an announcement to the market (such as the ASX, Chi X, NSX, etc) of the following details:

  • The listed entity’s name and ABN
  • Number of individuals for whom the JobKeeper payment was received in the financial year
  • Total sum of all JobKeeper payments received in a JobKeeper fortnight that ended in the financial year
  • Whether the entity has made one or more voluntary repayments of JobKeeper amounts received in the financial year and if so, the sum of those payments.

Important: The requirement to make an announcement to the market of the above information applies even though the entity may have already disclosed equivalent information in financial reports, previous announcements or other documents.

For which periods does the information need to be disclosed?

The effect of the legislation is that the information must be provided for any financial year in which an entity has received a JobKeeper payment. In other words, the legislation requires retrospective disclosure for past financial years in which the entity (or its subsidiaries) received a JobKeeper payment.

When does the information need to be disclosed?

The timeline for making the announcement of the information to the market depends upon when the entity lodges its financial report for the relevant financial year:

  • If the financial report has been lodged at commencement of the legislation (14 September 2021) – within 60 days after that day (i.e. 13 November 2021, or the next business day)
  • Otherwise, within 60 days after lodging the financial report with ASIC.
What happens to the information?

In addition to being disclosed to the market (ASX etc), the legislation requires ASIC to publish a consolidated report of all such notices given as soon as practicable after they are released to the market by entities. This report is required to be regularly updated.

What about other entities?

As part of the passage of the legislation, amendments to the legislation were proposed to require the Tax Commissioner to publish details of JobKeeper payments received by all entities with annual turnover of $10 million or more. These amendments were not successful.

Non-listed entities that are currently finalising their financial reports may wish to consider voluntarily including similar disclosures in those financial reports.

Next steps

There are some unclear aspects of the requirements that may require clarification by ASIC or others, such as the cut-off for disclosure between financial years. We will provide any further updates in future editions.

Key developments

Accounting for the new R&D tax offset

Key actions: Entities undertaking research and development (R&D) activities and claiming the available tax incentives need to understand the financial reporting implications of the new R&D tax offset regime which came into effect from 1 July 2021.

What’s changed?

A revised R&D tax offset regime, also known as the R&D Tax Incentive (RDTI), has taken effect for income years commencing on or after 1 July 2021.

The R&D tax offset is available as either a refundable or non-refundable tax offset, depending on whether the aggregated turnover of the claimant is less than $20 million (refundable) or $20 million and over (non-refundable). The overall cap on R&D expenditure has been raised to $150 million (from $100 million) and a new ‘R&D intensity’ premium introduced.

For an understanding of the tax aspects of the R&D tax offset, see our Tax Essentials publication Understanding the R&D Tax Incentive Regime.

What are the accounting implications?

Accounting for the new regime is expected to be largely consistent with general practice under the prior regime:

  • The refundable R&D tax offset is generally accounted for as a government grant, with a credit recognised in profit before tax over the period necessary to match the benefit of the credit with the costs for which it is intended to compensate
  • In contrast, the non-refundable R&D tax offset is generally accounted for as an income tax and a credit recognised within tax expense and a tax asset recorded when the entity satisfies the criteria to receive the credit. In addition, a deferred tax liability is recognised in relation to any related capitalised R&D asset.

The new R&D tax offset has different ‘clawback’ mechanisms for related government grants, ‘feedstock adjustments’ and balancing adjustments from the previous regime, and this may impact accounting policies.

What guidance is available?

We’ve published an updated Clarity publication, Accounting for the R&D tax offset, which:

  • Explains how the revised R&D tax offset works in practice
  • Explores how the R&D tax offset should be accounted for, including the accounting policy options and general practice, deferred tax effects, presentation and disclosure considerations and other matters
  • Outlines the accounting impacts of the new ‘clawback’ mechanism
  • Provides examples of accounting for the R&D tax offset using various accounting policies, both for refundable and non-refundable R&D tax offsets.

Key developments

Two minute update

Why does it matter? Ensure you are aware of the latest developments.

A summary of recent developments:

ASIC formalises AGM extensions

ASIC has issued a new Corporations Instrument to permit entities extra time to hold their annual general meetings (AGMs). Under ASIC Corporations (Extension of Time to Hold AGMs) Instrument 2021/770:

  • All public companies with balance dates between 21 February 2021 and 7 July 2021 have an additional two months to hold their AGM
  • Public companies limited by guarantee with balance dates between 24 January 2021 and 7 April 2021 have an additional four months to hold their AGM.    

This legislative instrument has been issued as a result of new powers given to ASIC under Treasury Laws Amendment (2021 Measures No. 1) Act 2021 and formalises and adds to the no-action position ASIC has taken giving companies with balance dates up to 7 July 2021 an additional two months to hold AGMs.

Using technology to hold meetings and sign documents

Federal Treasury has released proposed legislation to make permanent changes allowing companies and registered schemes to hold hybrid meetings (which give shareholders the option of either attending in person or remotely) and use technology to execute company documents, sign meeting-related documents and provide those documents to their members. These measures would be more broad and flexible than the existing temporary measures (recently enacted by Treasury Laws Amendment (2021 Measures No.1) Act 2021) which are due to expire on 31 March 2022. These proposals were issued on 30 August 2021 and comments closed on 10 September 2021.

Proposed ‘Corporate Collective Investment Vehicles’ (CCIV) regime

Federal Treasury has released proposed legislation to introduce the Corporate Collective Investment Vehicles (CCIV) regime, which would create a new form of 'tax pass through' entity with new tax and financial reporting requirements. These proposals were issued on 27 August 2021 and comments close 24 September 2021 (Treasurer media release).


Published: September 2021

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