Global

Details

  • Service: Tax, International Tax
  • Type: Regulatory update
  • Date: 11/20/2013

New Zealand - Proposed financial statement requirements for SMEs 

November 20:  New Zealand’s Inland Revenue Department is proposing minimum requirements for small and medium-size enterprise (SME) financial statements to support SME tax returns.

Inland Revenue’s role arises from the removal of the need for SMEs to prepare general purpose financial statements. As a major recipient of financial information, Inland Revenue has an interest in what will replace those statements, and it is expected the requirements are likely to form the basis of many special purpose financial statements.

Possible required statements

The minimum requirements could include:


  • Financial statements (i.e., balance sheet, profit and loss statement, and supporting schedules) based on double entry cost based accrual accounting
  • Use of tax values to determine income/expenditure when possible (e.g., fixed assets and depreciation)
  • Reconciliations of taxable and accounting income, tax losses, and imputation credits carried forward and used
  • Disclosures of available subscribed capital, capital gains, and related-party transactions

Inland Revenue’s primary focus is on the requirements for corporate SMEs (this is proposed to be effective for income years beginning on or after 1 April 2014). The requirements for non-corporate entities are expected to apply a year later.

KPMG observation

Observers have noted that Inland Revenue’s proposal would formalize the need for SMEs to track their available subscribed capital and tax-free capital gains. SMEs that have not tracked these amounts historically would need to recreate these balances. An extension in the application date for providing this information and/or the amounts being statute-barred might be warranted.


Read a November 2013 report [PDF 69 KB] prepared by the KPMG member firm in New Zealand: Inland Revenue proposes minimum financial reporting requirements for SMEs




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