Financial reporting standards for small-to-medium sized enterprises (SMEs)
Under the Financial Reporting Act 2013, 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 statement, and
- statement of accounting policies.
These financial statements:
- must be based on double-entry accrual accounting
- may show amounts using tax values, historical cost, or market value
- must show a reconciliation of the financial statements to taxable income, and
- must include a schedule of related-party transactions.
Companies that do not have a statutory obligation to prepare financial statements, or companies that choose not to file financial statements with Inland Revenue, may instead file the financial statements summary (IR10) form.
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, and the MLI is now in force in New Zealand.