ASIC Corporations (Non-Reporting Entities) Instrument 2025/436

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Legislation au F2025L01159 In force Legislative Instrument

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Explanatory Statement

 

ASIC Corporations (Non-Reporting Entities) Instrument 2025/436 and ASIC Corporations (Repeal) Instrument 2025/440

This is the Explanatory Statement for ASIC Corporations (Non-Reporting Entities) Instrument 2025/436 and ASIC Corporations (Repeal) Instrument 2025/440.

The Explanatory Statement is approved by the Australian Securities and Investments Commission (ASIC).

Summary

  1.              ASIC Corporations (Non-Reporting Entities) Instrument 2025/436 (the Instrument) allows non-reporting entities to prepare their financial statements using the concessions and transitional provisions for recognition and measurement in accounting standards which apply to reporting entities.
  2.              ASIC Corporations (Repeal) Instrument 2025/440 (the Repeal Instrument) repeals five financial reporting-related legislative instruments: ASIC Corporations (Stapled Group Reports) Instrument 2015/838, ASIC Corporations (Related Scheme Reports) Instrument 2015/839, ASIC Corporations (Non-Reporting Entities) Instrument 2015/841, ASIC Corporations (Post Balance Date Reporting) Instrument 2015/842 and ASIC Corporations (Externally-Administered Bodies) Instrument 2015/251.

Purpose of the instrument

  1.              Section 296(1) of the Corporations Act 2001 (Corporations Act) requires all entities that prepare financial reports under Chapter 2M to comply with accounting standards. Some accounting standards are stated to apply to all entities reporting under Chapter 2M and others are stated to apply only to entities reporting under Chapter 2M that are ‘reporting entities’.
  2.              Regulatory Guide 85 Reporting requirements for non-reporting entities (RG 85) outlines our view that non-reporting entities preparing financial reports under Chapter 2M must comply with the recognition and measurement requirements of accounting standards in order to meet a number of general obligations under the Corporations Act.
  3.              Non-reporting entities that apply only the recognition and measurement requirements of accounting standards and not the disclosure requirements may not be able to take advantage of certain concessions from those requirements that are available to reporting entities. These concessions include:
    1.        concessions available under Australian Accounting Standard AASB 1 First-time adoption of Australian accounting standards (AASB 1); and
    2.       transitional provisions or other concessions under a non-mandatory accounting standard.
  4.              For example, AASB 1 provides some concessions from reworking information to comply with the recognition and measurement requirements when an entity adopts the Australian accounting standards for the first time. These concessions would appear to be available only to entities that apply all of the requirements of the Australian accounting standards, including all disclosure requirements. As non-reporting entities may not be required to comply with all disclosure requirements, the concessions may not be available to them.
  5.              It would be inconsistent for non-reporting entities to not have the advantage of concessions available to reporting entities. This instrument ensures that non-reporting entities can take advantage of concessions or other modifications of the recognition and measurement standards of accounting standards that are available to reporting entities.
  6.              Relief for the application of accounting standards by non-reporting entities was previously provided by ASIC through ASIC Class Order [CO 05/639]. This was continued on substantially the same terms in ASIC Corporations (Non-Reporting Entities) Instrument 2015/841, which sunsets on 1 October 2025. 
  7.              The purpose of the Repeal Instrument is to repeal five financial reporting-related legislative instruments that are due to sunset on 1 October 2025.

Consultation

  1.          ASIC consulted publicly on our proposal to remake the relief through CS 24 Proposed remake of financial reporting-related legislative instruments. We received one submission, which supported remaking the instrument.

Operation of the instrument

  1.          Section 4 of the Instrument provides a simplified outline for the instrument. Its purpose is to assist readers in understanding the substantive provisions. However, the outline is not intended to be comprehensive, and readers should rely on the substantive provisions when considering the instrument’s effect. 
  2.          Section 6 of the Instrument provides that a company or registered scheme that is not a reporting entity is allowed to comply with the recognition and measurement requirements of accounting standards as if it is a reporting entity provided it takes all reasonable steps to ensure that the financial report complies with all recognition and measurement requirements that apply to a reporting entity. That is, the company or registered scheme can take advantage of concessions and transitional provisions in accounting standards that are otherwise only available to reporting entities.
  3.          Schedule 1 of the Repeal Instrument repeals the five financial reporting-related instruments.

Legislative instrument and primary legislation 

  1.          The subject matter and policy implemented by the Instrument is more appropriate for a legislative instrument than primary legislation because it provides relief where strict compliance with the primary legislation produces anomalous outcomes that would be inconsistent with the intent of the primary law.
  2.          If the matters in the Instrument were to be inserted into the primary legislation, they would insert, into an already complex statutory framework, a set of specific provisions that would apply only to a relatively small group of entities. This would result in additional cost and unnecessary complexity for other users of the primary legislation.
  3.          It will be a matter for the Government and for Parliament to consider whether the primary legislation may need to be amended in the future to include the substance of the relief in the Instrument in legislation.

Duration of the instrument

  1.          The duration of the Instrument is 5 years.

Legislative authority

  1.          The Instrument is made under subsection 341(1) of the Corporations Act 2001.
  2.          The Repeal Instrument is made under sections 250PAA, 341, 341A, 601QA, 992B and 1217 of the Corporations Act 2001.
  3.          The Instrument and the Repeal Instrument are disallowable legislative instruments.

Statement of Compatibility with Human Rights 

  1.          The Explanatory Statement for a disallowable legislative instrument must contain a Statement of Compatibility with Human Rights under subsection 9(1) of the Human Rights (Parliamentary Scrutiny) Act 2011. A Statement of Compatibility with Human Rights is in the Attachment.

Attachment

Statement of Compatibility with Human Rights

 

This Statement of Compatibility with Human Rights is prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.  

ASIC Corporations (Non-Reporting Entities) Instrument 2025/436 and ASIC Corporations (Repeal) Instrument 2025/440

Overview

1. ASIC Corporations (Non-Reporting Entities) Instrument 2025/436 (the Instrument) allows non-reporting entities to prepare their financial statements using the concessions and transitional provisions for recognition and measurement in accounting standards which apply to reporting entities.

2. ASIC Corporations (Repeal) Instrument 2025/440 (the Repeal Instrument) repeals five financial reporting-related legislative instruments that are scheduled to sunset on 1 October 2025: ASIC Corporations (Stapled Group Reports) Instrument 2015/838, ASIC Corporations (Related Scheme Reports) Instrument 2015/839, ASIC Corporations (Non-Reporting Entities) Instrument 2015/841, ASIC Corporations (Post Balance Date Reporting) Instrument 2015/842 and ASIC Corporations (Externally-Administered Bodies) Instrument 2015/251.

Assessment of human rights implications

3. The Instrument and the Repeal Instrument do not engage any of the applicable rights or freedoms.  

Conclusion

4. The Instrument and the Repeal Instrument are compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

 

Overview

The ASIC Corporations (Non-Reporting Entities) Instrument 2025/436 was enacted to address a gap in financial reporting requirements for non-reporting entities, ensuring they can access the same concessions and transitional provisions available to reporting entities under accounting standards. This legislative instrument was introduced by the Australian Securities and Investments Commission (ASIC) under the authority of the Corporations Act 2001. The policy objective of the Instrument is to provide relief for non-reporting entities, ensuring they can comply with recognition and measurement requirements of accounting standards as if they were reporting entities, thus avoiding anomalous outcomes that would be inconsistent with the intent of the primary legislation. The ASIC Corporations (Repeal) Instrument 2025/440 was also enacted to repeal five related financial reporting legislative instruments due to expire on 1 October 2025. This repeal addresses the need to streamline and modernise the regulatory framework, ensuring that outdated or redundant instruments are removed to reduce complexity and cost for entities subject to these regulations.

Scope and Application

The ASIC Corporations (Non-Reporting Entities) Instrument 2025/436 and the ASIC Corporations (Repeal) Instrument 2025/440 together serve to address specific financial reporting requirements for non-reporting entities and the repeal of outdated financial reporting instruments. The former permits non-reporting entities to utilise the same concessions and transitional provisions for recognition and measurement in accounting standards as are available to reporting entities. This aligns the financial reporting obligations of non-reporting entities with those of reporting entities, thereby ensuring consistency and fairness in compliance with accounting standards. The Repeal Instrument, on the other hand, facilitates the repeal of five existing financial reporting-related instruments that are scheduled to sunset on 1 October 2025, streamlining the legislative framework and ensuring that outdated regulations are removed from the statute books. Both instruments are applicable to non-reporting entities as defined under the Corporations Act 2001, and their implementation is overseen by the Australian Securities and Investments Commission (ASIC).

Key Provisions

The ASIC Corporations (Non-Reporting Entities) Instrument 2025/436 (section 6) allows non-reporting entities, such as companies or registered schemes that are not considered reporting entities, to prepare their financial statements in a manner similar to reporting entities. Specifically, these entities can take advantage of the same recognition and measurement concessions and transitional provisions available to reporting entities under accounting standards. To comply with this, non-reporting entities must ensure that their financial reports adhere to all recognition and measurement requirements applicable to reporting entities, whilst still taking all reasonable steps to ensure their financial reports comply with these standards. The obligations imposed on non-reporting entities by the Instrument include the necessity to take all reasonable steps to ensure their financial reports meet the recognition and measurement standards of accounting standards, which are typically more stringent for reporting entities. This means that non-reporting entities must not only comply with the recognition and measurement requirements but also ensure that their financial reports are prepared in a manner that reflects the concessions and transitional provisions available to reporting entities. This requirement ensures consistency and fairness in financial reporting practices across different types of entities, despite their differing reporting obligations. Failure to comply with the provisions of the Instrument could lead to various consequences. While the Instrument itself does not explicitly outline specific penalties, non-compliance could result in financial reports that do not accurately reflect the entity’s financial position and performance, potentially leading to regulatory scrutiny or penalties under the broader Corporations Act 2001. Additionally, if non-reporting entities do not take all reasonable steps to ensure compliance, they may face enforcement actions by ASIC, including fines and other legal repercussions. The exact penalties would be determined based on the specific nature and severity of the non-compliance, in line with the provisions of the Corporations Act. The ASIC Corporations (Repeal) Instrument 2025/440 (Schedule 1) aims to repeal five existing financial reporting-related legislative instruments that are set to sunset on 1 October 2025. These repealed instruments include the ASIC Corporations (Stapled Group Reports) Instrument 2015/838, ASIC Corporations (Related Scheme Reports) Instrument 2015/839, ASIC Corporations (Non-Reporting Entities) Instrument 2015/841, ASIC Corporations (Post Balance Date Reporting) Instrument 2015/842, and ASIC Corporations (Externally-Administered Bodies) Instrument 2015/251. The repeal of these instruments signifies a streamlining of financial reporting regulations, consolidating and updating the regulatory framework to better align with current practices and standards.

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Area of Law
Corporate Law & Governance
Instrument
Statutory Instrument
Concepts
Regulatory Standards
Transitional Provisions
Repeal & Amendment
Compliance Obligations

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.