Under the rules, a grandfathered large proprietary company is exempted because it was not required to lodge some financial information before changes to the Corporations Act in 1995.
The test for lodgement was ownership-based, rather than based on current economic significance and size. No new companies can be added to the list.
Companies previously on the list will have to comply with ASIC rules, lodging an annual financial report showing revenue, profit, debt and other measures.
Labor, Greens to support the change
Former independent senator Rex Patrick railed against the list in parliament, and repeatedly pushed legislation to amend the Corporations Act to abolish the list, which he said was not line with community expectations.
Changes to a bill dealing with a range of superannuation and tax matters passed the Senate on Thursday morning, with Labor and the Greens teaming up on the repeal of exempt proprietary companies from ASIC rules.
Labor has previously supported abolishing the grandfathered large proprietary companies and Assistant Treasurer Stephen Jones expects the amended bill to pass both houses of parliament.
An amendment from Greens Senator Nick McKim, supported by Labor, was the mechanism for change.
The Coalition opposed the change, saying it would increase red tape in the economy.
Ms Gallagher noted Mr Patrick’s efforts to end the grandfathered corporations list under the former Morrison government.
“I’m sure that he will be very pleased to see this amendment pass. I acknowledge the efforts he took to try and put these arrangements in place,” she said.
“There is no clear economic or policy reason for continuing this exemption.”
Planned reviews were previously stopped by the Howard government while companies on the list with annual turnovers of more than $100 million faced losing their exemptions under laws passed by the Rudd-Gillard government. The laws would have required the Commissioner of Taxation to publish some tax information.
But the Coalition overturned that change, fearing directors could face kidnapping or commercial disadvantage from their information being made public.
Regulator has backed the change for years
ASIC recommended the list’s abolition in inquiries into corporate tax avoidance in the last three terms of parliament.
The regulator told parliament the former Coalition government was considering the recommendation to end rules for grandfathered large proprietary companies “in due course”. No action was ever taken.
On the latest public update were 12 companies that lodge financial reports under Tax Office significant global entity rules. Some data for the firms, including 7-Eleven Holdings, Suttons Investments and Baiada companies, is made public already.
In 2018, Mr Turnbull asked for his company, Turnbull & Partners, to be removed from the list, but ASIC said it had “no power” to remove firms, even at the request of an owner or director.
Thursday’s sitting of parliament is the last until September 5. The amended bill will be considered by the House of Representatives, where Labor has a majority.