Many mid-sized private companies could soon stop preparing audited annual accounts. The Treasurer has released draft regulations that would double the monetary thresholds that make a proprietary company “large” under the Corporations Act, and consultation closes on Monday 2 November.

What changes

A proprietary company is classified as large or small according to whether it meets at least two of three tests, calculated together with any entities it controls. Under the exposure draft Corporations Amendment (Proprietary Company Thresholds) Regulations 2026:

  • Consolidated revenue: the threshold rises from $50 million to $100 million.
  • Consolidated gross assets: the threshold rises from $25 million to $50 million.
  • Employees: the test of 100 employees is unchanged.

The new thresholds would apply to financial years beginning on or after 1 July 2027. Companies that fall below them would no longer have to prepare the annual financial, directors’ and sustainability reports required of large proprietary companies.

The government’s case

Treasurer Jim Chalmers’ release of 19 October says the thresholds have not been updated since 2019 and that the changes will save business more than $210 million a year in compliance costs. “This is about cutting red tape for business, better targeting company reporting obligations and boosting productivity,” the release says. The measure was announced in the 2026–27 Budget.

The trade-off

Law firm Herbert Smith Freehills Kramer says a significant number of large proprietary companies would be reclassified as small. It points out that reports lodged by large proprietary companies are publicly available from ASIC for a small fee and are a useful source of information for prospective bidders, so some attractive private targets would drop off the public record. That may push buyers to approach targets earlier, and give owners more control over when financial information is released in a sale process.

The firm also notes that the threshold for a small company in the United Kingdom is roughly $20 million in revenue and $10 million in gross assets, well below Australia’s proposed levels. The government is separately working to simplify the deed of cross guarantee regime, which provides further reporting relief for some corporate groups.

What private companies should do

Companies sitting between the old and new thresholds should confirm with their accountants which side of the line they will fall on for the 2027–28 year, and check whether lenders, investors or shareholder agreements require audited accounts regardless. Losing a statutory obligation does not remove a contractual one.

Sources: Treasurer’s media release, 19 October 2026; Herbert Smith Freehills Kramer, 28 October 2026; CPA Australia Tax News, 29 October 2026.