Annual reporting
The directors’ report
Only two kinds of corporation lodge one: large corporations, and any corporation with income of $5 million or more. If your corporation is small or medium and under that figure, this report is not yours to worry about.
Who is in, and who is out
What the Act says
Who needs to provide one: “Large corporations. Any size corporation with a CGOI of $5 million or more.”
Who does not: “Small and medium corporations with an income of less than $5 million.”
What that means
Two separate doors lead into this obligation, and you only need one of them:
- You are registered large; or
- Your income is $5 million or more, whatever size you are registered as.
So a corporation registered medium that earns $5 million still lodges one. Size alone does not settle it.
Checked against ORIC — Corporation reporting guide (June 2020), .
What it is for
The directors’ report helps members understand the corporation’s business. That is its stated purpose, and it is worth taking literally: the audience is members, not the Registrar and not an accountant.
The financial report says what happened to the money. The directors’ report is where the board explains what the corporation did and why, and it is the part a member can actually read. Boards that treat it as a compliance formality produce something nobody reads; boards that treat it as their annual account to their members produce something useful, and it costs no more effort.
You do not have to say things twice
If a detail is already in the financial report, it does not have to be repeated in the directors’ report. But there is a condition attached that is easy to miss: the directors’ report must state what has not been included, and where in the financial report it can be found.
In other words you can cross-reference, but you cannot simply omit. A directors’ report that quietly leaves things out, without pointing to where they live, has not met the requirement.
Consolidated entities
If your corporation is required to prepare consolidated financial statements, it is also required to prepare a directors’ report for the consolidated entity, under section 22 of the CATSI Regulations. Corporations that control a subsidiary or a trading entity sometimes prepare the consolidated accounts and stop there, which leaves this outstanding.
When it is due
Between 1 July to 31 December each year, the same window as the general report. See reporting deadlines if your financial year is not July to June.
Not sure whether this applies to you?
The two triggers, registered size and the $5 million income figure, are exactly what the reporting checker tests. It will also tell you which of the other reports you need.
Frequently asked questions
Who needs to provide a directors' report?
Large corporations, and any size corporation with a consolidated gross operating income of $5 million or more.
Who does not need one?
Small and medium corporations with an income of less than $5 million.
When is it due?
Between 1 July and 31 December each year, alongside the general report.
What goes in a directors' report?
It helps members understand the corporation’s business. If details are already in the financial report they do not have to be repeated — but the directors’ report must say what has not been included and where in the financial report it can be found.
We prepare consolidated financial statements. Does that change anything?
Yes. A corporation required to prepare consolidated financial statements is also required to prepare a directors’ report for the consolidated entity, under section 22 of the CATSI Regulations.