GPFS – To lodge or not to lodge? | KPMG | AU
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GPFS – To lodge or not to lodge?

GPFS – To lodge or not to lodge?

John Salvaris and Melissa Spencer explore some uncertainties regarding the proposed GPFS legislation.


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Old-fashioned turntable

“A long long time ago I can still remember

how that music used to make me smile

And I knew if I had my chance

That I could make those people dance

And maybe they'd be happy for a while”

These were Don Maclean’s opening words to ‘American Pie’.

These words came to us as we were thinking about the Australian Taxation Office (ATO) consultation process surrounding the new general purpose financial statements (GPFS) legislation.

And we were thinking, hmm, maybe not everyone is happy and dancing about some of these new proposals.

Insurance branch of offshore entities

If you are an insurance branch of an offshore entity and regulated by Australian Prudential Regulation Authority (APRA), you may need to cast your dancing shoes aside and consider the following:

The proposed requirement to prepare and lodge GPFSs with the ATO should apply, where you:

  • are a significant global entity (a member of a group of entities consolidated for accounting purposes with an annual global income of A$1 billion or more)
  • do not lodge GPFRs with the Australian Securities and Investment Commission (ASIC)
  • are required to lodge an income tax return for income years commencing on or after 1 July 2016.

As an insurance branch of an offshore entity, you are required to prepare financial statements that comply with Australian Accounting Standards. However, these statements are required to be audited and lodged with APRA and are prepared on a different basis than financial statements prepared in accordance with the Corporations Act, which are lodged with ASIC. Therefore the question remains, do the above requirements apply?

Foreign insurance companies (holding an AFS license)

A foreign insurance company (and holder of an AFS license) will generally be required to lodge audited financial statements with ASIC. The current drafting of the rules confirms either a stand-alone GPFS just for the entity, or a consolidated GPFS that includes the entity is acceptable. Therefore, prima facie, this requirement should not apply.

However, the consultation paper examines two alternative interpretations of the above:

  • First view – if you lodge global parent’s consolidated GPFS, it would likely have to be prepared ‘in accordance with’ Australian accounting standards (a requirement of the new rules).
    Second view – you could lodge your global parent’s consolidated GPFS prepared in accordance with accounting standards used in the global parent’s home country.

The answer is unclear at this stage and is expected to the resolved via the ATO consultation process (submissions were due 30 September 2016). KPMG is preparing a submission.

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