• Service: Audit, Financial Statement Audit, Financial Reporting & Accounting Standards
  • Type: Regulatory update
  • Date: 16/05/2014

Reporting Updates

Reporting Updates
Reporting Updates (formerly known as Flash Reports) outline changes occurring within the Australian financial reporting environment.

14RU-003 Take three: Proposed changes to payment of dividends 

With little fanfare and commentary, on 10 April, 2014 Treasury released an Exposure Draft (ED) Corporations Legislation Amendment (Deregulatory and Other Measures) Bill 2014 proposing various amendments to the Corporations Act. The main proposed amendment seeks to change the way in which companies may pay dividends replacing the ‘net assets’ tests with a pure solvency test and exempting dividend payments from capital maintenance provisions to the extent that they are ‘equal reductions’ in capital.  

The ED also proposes minor changes in the following areas:

  • holding of general meetings
  • remuneration reporting
  • auditor appointment for companies limited by guarantee
  • changes in financial years.


The ED is part of the government’s efforts to reduce compliance costs for business and benefit business productivity generally. It is expected to be introduced sometime in the 2014 Autumn/Winter sittings of Parliament.


Key insights

  • Change S254T dividend test to a pure solvency test.
  • Introduce S254TA to reduce risk dividend also requires capital reduction approval.
  • Disclose remuneration governance framework in annual report.
  • Unlisted disclosing entities no longer prepare a remuneration report.
  • Certain companies limited by guarantee need not appoint auditor.

Financial Reporting & Accounting Standards

By adopting International Financial Reporting Standards (IFRS), Australia has taken an important step in delivering more transparent financial information for shareholders and regulators.