The main changes between the 2023 specifications and 2024 specifications are as follows: 

• Reorganisation of sections: The ‘HERDC specifications – updates to note’ section was moved to the beginning of the document, and the ‘Introduction’ was shifted to the second section to enhance the document’s flow.
• Clarification on data usage: A minor amendment was made to specify that preliminary HERDC data may be shared with Knowledge Commercialisation Australasia (KCA) to assist with its Survey of Commercialisation Outcomes from Public Research (SCOPR) data collection, validation, and reporting processes.
• Materials required: The table detailing required materials was reworded and repositioned within the document for better comprehension.
• Inclusions and exclusions on income return:: Section 4.2.1(a) was restructured into parts (a) and (b) to provide clearer guidance on non-Commonwealth Government top-ups.
• Subsidiaries and affiliates: Clarifications were made regarding the eligibility of subsidiaries and affiliates as research end-users for the Research Training Program (RTP) industry internship weighting.
• Shared income: An example was expanded to demonstrate the treatment of shared income with non-Higher Education Providers (non-HEP) organizations that are neither affiliates nor subsidiaries. Example: If HEP A receives a grant of $50,000 and allocates $20,000 to HEP B and $5,000 to a non-HEP organization that is not an affiliate or subsidiary, HEP A should report only the remaining $25,000 as its R&D income. HEP B would report the $20,000 it received, while the $5,000 allocated to the non-HEP organization is not reportable by either HEP.
• Sub-category 3.8 International Government (Other): Grants from the US National Institutes of Health were removed as an example in this sub-category.
• References to the department: Updates were made to clarify that references to the department pertain to the Australian Government Department of Education.  

Each HEP must arrange for an audit of the Category 1, 2, 3 and 4 R&D income in their respective R&D income return and provide the department with a Special Purpose Audit Report under the Auditing and Assurance Standard Board (AASB) Auditing Standard ASA800, which clearly certifies that the R&D income recorded is correct. The audit report is due 30 June 2025.

How SW can help

With a dedicated education group, we specialise in performing HERDC audits for HEPS. If you are looking for an experience team to perform your HERDC audit, please reach out to Christine Krause and Matthew Paull.   

We will be at ARMS 2025 Melbourne Conference– looking forward to connecting and sharing insights from the HERDC 2024 audits.

The post 2024 HERDC specifications released: Key updates & audit requirements appeared first on SW Accountants & Advisors.

Introduction

Following the passage of the legislation by the Australian Parliament, the AASB approved two inaugural sustainability reporting standards modelled after international guidelines and incorporate local legislation.

Climate first approach

Unlike the International Sustainability Standards Board standards, Australian sustainability standards have adopted a climate-first approach by making AASB S2 Climate-related Disclosures mandatory. Companies with reporting obligations must disclose key climate-related areas, including:

• governance and strategies
• risks and opportunities
• metrics and targets concerning emissions, covering direct emissions (Scope 1), energy consumption (Scope 2), and value chain emissions (Scope 3).

Additionally, AASB S2 incorporates changes mandated by legislation, including enhanced scenario analysis. Entities must disclose scenario analysis using at least both of the following scenarios:

• low warming scenario: global average temperature increase is limited to no more than 1.5 degrees
• high warming scenario: global average temperature increase exceeds 2.5 degrees.

Voluntary sustainability disclosure for other topics

AASB S1 General Requirements for Disclosure of Sustainability-related Financial Information covers various sustainability topics including biodiversity and human capital and remains a voluntary standard. This approach contrasts from the ISSB standards which phase  in additional issues from the second year after climate disclosures.

To assist companies in adopting the ISSB-based sustainability standards voluntarily, the IFRS Foundation has published guidance for preparers.

Audit requirements

With the publication of the accounting standards, we are one step closer to implementation. The first group of companies must start reporting for the financial year ending 31 December 2025. However, one key missing piece is the auditing standards, as the company’s financial auditor will audit the sustainability report. The Auditing Assurance Standards Board (AUASB) is currently consulting with stakeholders to determine the assurance rollout for climate-related disclosures. By 2030, all sustainability reports will be subject to audit.

Based on the most recent exposure draft, the proposed audit requirements will be phased in. In the first year of reporting, different content will be subject to varying assurance requirements:

• limited assurance over Scope 1 and 2 emissions for the first year, moving to reasonable assurance thereafter
• other areas of disclosure will gradually be subject to review or audit from the second year onwards.

How SW can help

To make sure you are prepared, SW can conduct a gap analysis and create a road map to guide you on your sustainability journey.

Our audit and advisory experts are well-versed in sustainability accounting standards and will guide your business through any Australian reporting developments.  

Keep an eye out for our alerts on the finalisation of the sustainability reporting assurance standard. 

Contributors

Jimmy Cao

The post From legislation to action: Australia’s sustainability reporting standards finalised appeared first on SW Accountants & Advisors.

Requirements for calculating tax liabilities that arise from general insurance contracts are set out in Division 321 of the ITAA 1997.  

The existing legislations broadly align with the requirements of AASB 1023, which was replaced by AASB 17 as the mandatory accounting methodology for insurance contracts for financial reporting purposes from 1 January 2023.  

The proposed amendments will ensure general insurers be able to continue prepare their income tax returns and align tax treatments of insurance contracts with audited financial reporting information.  

Proposed changes 

Liability for incurred claims  

The existing rules in Subdivision 321-A provides that assessable income or deduction for an income year is determined by comparing the outstanding claims liability at the end of that year against prior income year.  

In the proposed draft legislation, this would be replaced with the AASB 17 concept of “liability for incurred claims”, being the fulfilment cash flows related to past services allocated to the relevant group contracts at that date.  

The amount is further adjusted to exclude any costs (e.g. claims handling costs, etc) that could not be directly attributable to a particular claim and by the present value of estimated recoveries.  

Liability for remaining coverage 

The existing rules in Subdivision 321-B provide that assessable income or deduction for an income year is determined by comparing the unearned premium reserve at the end of that year against prior income year using a five-step method.  

Under the proposed change, this concept is replaced with “liability for remaining coverage”, defined as fulfilment cash flows relating to future services allocated to the relevant group of contracts at that date.

This amount is then adjusted for tax purposes to exclude certain items (defined within AASB 17), including onerous contracts and fulfilment cash flows that are not premiums (e.g. certain reinsurance premiums, commissions, etc.).     

What has not changed? 

Payment of claims 

The tax treatment for payment of claims has not changed. In that regard, a claim under general insurance policies is treated as paid and therefore deductible, even in situations where funds have not actually been disbursed at year end, if the claim is settled within the income year, the relevant liability is no longer reflected as liability for incurred claim and payable by the insurer at the end of that income year.  

Gross Premiums 

Gross premium income received or receivable for an income year in respect of general insurance policies will continue to be included in the general insurer’s assessable income. 

Application Date 

The new legislation is set to apply to income years beginning on or after 1 January 2023, to align with the application of AASB 17.

Transitional arrangements are available in the first income year to ensure no permanent differences will arise for general insurers on adoption of AASB 17.

How SW can help 

The Treasury is currently seeking submissions, with the consultation period concluding on 21 July 2023.  

SW will be monitoring for new announcements and introduction of the bill and will keep you updated once additional information is available.  

Please reach out to your SW Partner or contact for any assistance on how this may impact your business. 

Contributor: 

Antony Cheung

The post Proposed income tax amendments for General Insurance Contracts appeared first on SW Accountants & Advisors.

The ISSB has issued two standards focusing on material risks and opportunities related to sustainability (IFRS S1) and climate (IFRS S2). The new standards are effective for reporting periods beginning on or after 1 January 2024 however, each jurisdiction may choose its own effective date and which entities would be mandated to comply.

In Australia, Treasury received a range of responses to its first consultation paper regarding rollout for mandatory climate disclosure, and the majority of stakeholders agreed that a phased approach should be implemented.

Treasury has now released a second consultation paper, open until 21 July 2023, seeking consultation on several issues such as the timing of the rollout and covered entities, seeking input whether the standards should initially apply to listed entities and what an appropriate entity size would be. Other matters under consultation include what the legislative framework in Australia would be and who entities would be reporting to.

Proposed rollout

Treasury’s proposed roadmap for mandatory adoption can be summarised as follows:

Group 1 | 2024-25

Entities preparing accounts in accordance with the Corporations Act (chapter 2M) and meets at least 2 of the following:

• over 500 employees
• consolidated gross assets of $1 billion or more
• consolidated revenue of $500 million or more.

AND Entities preparing accounts in accordance with the Corporations Act (chapter 2M) that are a ‘controlling corporation’ under the NGER Act and meet the NGER publication threshold.

Group 2 | 2026-27

Entities preparing accounts in accordance with the Corporations Act (chapter 2M) and meets at least 2 of the following:

• over 250 employees
• consolidated gross assets at end of company’s financial year and any controlled entities is $500 million or more
• consolidated revenue for company’s financial year and any controlled entities is $200 million or more.

AND Entities preparing accounts in accordance with the Corporations Act (chapter 2M) that are a ‘controlling corporation’ under the NGER Act and meet the NGER publication threshold.

Group 3 | 2027-28

Entities preparing accounts in accordance with the Corporations Act (chapter 2M) and meets at least 2 of the following:

• over 100 employees
• consolidated gross assets at the end of the company’s financial year and  controlled entities is $25 million or more
• consolidated revenue for the company’s financial and any controlled entities it $50 million or more.

AND Entities preparing accounts in accordance with the Corporations Act (chapter 2M) that are a ‘controlling corporation’ under the NGER Act.

Voluntary reporting disclosure

Whilst currently not mandatory, many organisations will choose to early adopt, particularly if they know their investors or other stakeholders will find the information relevant. This includes entities in industries that are expected to be significantly impacted by climate change and/or sustainability related matters.

SW highly recommends that entities consider the adequacy of systems and processes to capture sustainability and climate related information.

How SW can help

Our team of audit and assurance experts are fully informed of the requirements of the sustainability accounting standards and can assist with providing guidance for your business, as well as keeping you abreast of developments from an Australian reporting context.

Reach out to our key contacts here for a conversation.

Contributors

James Serpell

The post Sustainability Accounting Standards issued appeared first on SW Accountants & Advisors.

This announcement on Friday 3 June effectively removes annual special purpose financial statements as an option for AFSL holders.

Under the new reporting requirements, many AFS licensees’ annual financial reports must be prepared in accordance with the disclosure requirements of all Australian Accounting Standards as set by the Australian Accounting Standards Board (AASB). Some AFS licensees will be able to apply a simplified disclosure regime.

Some AFSL holders will also be able to choose to defer these changes by one year, if they meet the requirements described below.

Changes to AFSL reporting requirements

From financial years commencing 1 July 2021, entities preparing financial statements in accordance with the Corporations Act 2001 (the Act) can no longer prepare special purpose financial reports (SPFRs) that do not contain all disclosures required by the accounting standards set by the AASB.

All entities must apply the full recognition and measurement requirements for assets, liabilities, income and expenses. Accounting standards, however, allow entities that do not have public accountability to use a simplified disclosure regime.

Entities that have public accountability must comply with the disclosure requirements of the full standards.

An entity has public accountability where:

• its debt or equity instruments are currently, or in the process of being, traded in a public market, or
• it holds assets in a fiduciary capacity e.g. entities that hold client monies.

ASFL entities with Public Accountability

For the avoidance of doubt of ‘Public Accountability’, ASIC has also stated that the following entities will be required to comply with the disclosure requirements of all AASB standards:

• Large or sophisticated licensees with greater market impact
• Regulated by the Australian Prudential Regulatory Authority
• Participants in a licensed market
• Participants in a clearing and settlement facility
• Retail over-the-counter derivative issuers
• Wholesale electricity dealers
• Corporate advisors that deal in financial products
• Over-the-counter derivative traders
• Wholesale trustees
• Responsible entities of a registered scheme
• Corporate directors of a corporate collective investment vehicle
• Providers of a custodial or depository service
• Operators of an investor directed portfolio service.

All licensees will be required to prepare a cash flow statement. In addition to single entity financial statements, consolidated financial statements must be presented where the licensee has controlled entities.

Option to defer by 12 months

AFS licensees that prepared SPFRs last year, and that do not prepare reports under Chapter 2M, can choose to defer the new disclosure requirements to financial years commencing on or after 1 July 2022, i.e. until 30 June 2023.

In deciding whether to defer adoption of this standard, AFSL holders should consider the costs and benefits of adopting the new reporting framework from 1 July 2021 vs deferring to 1 July 2022.

Investors, lenders and other stakeholders may have an expectation of the entity to comply with disclosure requirements of Australian Accounting Standards and might have concerns about the quality of the entity’s financial reporting if the entity continues to prepare special purpose financial statements in FY22. However, adopting a new financial reporting framework is likely to incur additional compliance costs.

We recommend that AFSL holders reach out to their trusted SW advisor to discuss the most suitable approach for 30 June 2022.

Transitional relief

Comparative information need not contain the new disclosures in the first report prepared under the new requirements.

Update form FS70

We are expecting ASIC to release an amended version of form FS70 in late June

Action to Be Taken

Consider whether the entity would be required to comply with the full disclosure requirements of all AASB standards (Tier 1); or can apply simplified disclosures (Tier 2)

• Consider whether the entity qualifies for a 12 month deferral and whether deferring would be beneficial
• Update the financial statement template as soon as possible to avoid last minute problems

Reference

ASIC media release 3 June 2022: 22-128MR ASIC announces financial reporting changes for AFS licensees

Important Dates

Annual reporting periods beginning before 1 July 2021 i.e. financial year ending 30 June 2022

How SW can assist

Contact René, Rami or your trusted SW expert for assistance to:

• assess whether deferral of adoption is beneficial or detrimental to the company
• migrate and prepare new reports under AASB reporting requirements.

The post ASIC announces financial reporting changes for AFS licensees appeared first on SW Accountants & Advisors.

重点税务与财务事宜更新总汇 | Summary of key tax & accounting matters 

• 澳大利亚税务局最新税收裁定与指导意见
  Recent Key Taxpayer Alerts & Guidance
• 近期重大税务案件回顾
  Recap of key cases
• 转让定价最新消息
  Key Transfer Pricing updates
• 上期财务知识更新讲座内容回顾
  ​Previous accounting update session recap
  • 现代奴役制合规申报
    Modern Slavery Statement
  • 由2020年及2021年1月1日起生效的会计准则变更
    Standards amendments effective 1 January 2020 and 2021 onwards
• ASIC 最新消息及其他条例变化
  ASIC update and other regulatory changes
• 取消特殊目的财务报告
  Removal of Special Purpose Financial Reporting
• 澳大利亚会计准则变更2020-3号 (2022年1月1日起生效)
  Amendments to Australian Accounting Standards 2020-3 (effective 1 January 2022 onwards)

专家团队 | Our experts

张洋 Bessie Zhang 合伙人 Partner E bzhang@sw-au.com		叶嘉 James Ye 合伙人 Partner E jye@sw-au.com			栾万博 Leo Luan 总监 Associate Director E lluan@sw-au.com
林长春 Neville Lin 高级经理 Senior Manager E nlin@sw-au.com		施洋 Yang Shi 总监 | 转让定价专家 Associate Director | Transfer Pricing Specialist E yshi@sw-au.com			陈泓洋 Michael Chen 经理 Manager E mchen@sw-au.com

联系我们 Contact us

若您有任何疑问或想了解更多详情，欢迎通过 marketing@sw-au.com 联系本所市场团队。
If you have any queries or would like more information, please contact the Marketing team via marketing@sw-au.com.

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Follow our WeChat account to stay updated on insights and our other webinars.

The post 全中文税务与财务更新讲座 | Mandarin Tax and Accounting update appeared first on SW Accountants & Advisors.

Introduction

Whilst the removal of Special Purpose Financial Statements (SPFS) has yet to impact Not-for-Profit entities (NFPs), the AASB has introduced AASB 2019-4.

NFPs preparing SPFS from 30 June 2020 must now disclose its compliance with the recognition and measurement (R&M) requirements to the Australian Accounting Standard (AAS), including consolidation and equity accounting requirements.

Who is affected?

• Medium and large ACNC charities preparing SPFS that compliywith ACNC reporting requirements
• NFP entities lodging SPFS with ASIC (e.g. companies limited by guarantee)

Who is not affected?

• ACNC small charities
• ACNC charities not required to comply with ACNC reporting requirements due to transitional reporting arrangements
• NFP public sector entities
• FP and FP public sector entities preparing SPFS

What action must be taken?

1. Review existing accounting policies and R&M requirements in AAS to assess impact on any future transition from SPFS to any potential new reporting requirements
2. Draft disclosure in SPFS for approval by those charged with governance prior to year end

What are the disclosure requirements?

• The basis on which the decision to prepare SPFS was made
• Accounting policy in SPFS
  • Disclose an indication of where the accounting policy does not comply with the R&M requirements in AAS (except for consolidation and equity accounting), or
  • State that assessment on compliance has not been made
• Overall compliance with R&M requirements
  • Disclose whether or not, the SPFS overall comply with the R&M requirements in AAS (except for consolidation and equity accounting), or
  • State that such an assessment has not been made
• Application of consolidation and equity accounting requirements
  • Disclose whether or not interests in subsidiaries, associates or joint ventures have been consolidated or equity accounted consistent with requirements in AASB 10 and AASB 128. If not, disclose that fact and the reasons why
  • If assessment has not been made and not required by legislation to do so, disclose that no assessment has been made

Reference

Important Dates

Annual reporting periods ending on or after 30 June 2020.

How ShineWing Australia can assist

Contact one of our experts below to discuss how these financial reporting disclosure requirements affect your existing accounting policies.

Contacts

The post NFP Special Purpose Financial Statements appeared first on SW Accountants & Advisors.