Financial reporting standards for SMEs
The Financial Reporting Act 2013, along with the Financial Reporting (Amendments to other Enactments) Act 2013, changed the financial reporting and audit requirements for some New Zealand entities. As of 1 April 2014, entities that do not fall under the definition of ‘large’ or have ‘public accountability’ do not have to prepare general purpose financial statements in accordance with NZ GAAP. Entities that no longer have to prepare general purpose financial statements under the Financial Reporting Act 2013 are still required to prepare special purpose financial statements for tax purposes. Inland Revenue has provided the minimum requirements for financial statements in an Order in Council. These include:
- a balance sheet, profit and loss, and supporting notes or schedules
- accounts based on double entry cost-based accrual accounting
- tax values utilised for the determination of income and expenditure and preparation of the balance sheet
- a statement of accounting policies and changes
- a reconciliation of the financial statements to taxable income, and
- a schedule of related-party transactions.
BEPS Multilateral Instrument (MLI)
New Zealand signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (MLI) in June 2017. New Zealand has ratified the MLI.
The MLI will enter into force on 1 July 2018, given five signatories have now completed the ratification process. The MLI will enter into force for relevant New Zealand treaties three months after New Zealand has deposited the instrument of ratification with the OECD, provided the other treaty partner has also completed its ratification process.