We are a private company with no external shareholders. Are we still captured?

Yes, if you meet the tests. The regime is not limited to listed entities, so any entity that must lodge a financial report under Chapter 2M and meets a section 292A test is captured. That includes large proprietary companies, unlisted public companies and Australian subsidiaries of foreign groups.

We are foreign-owned. Does the Australian entity report?

Yes, if the Australian entity has its own Chapter 2M financial reporting obligation and meets a section 292A test, because it is tested on its own consolidated numbers rather than the global group's. Foreign ownership is not a factor in section 292A. A parent's climate report prepared overseas does not automatically discharge the Australian obligation.

We just crossed the threshold this year. Do we report this year or next?

You test the thresholds for each financial year on its own. There is no grace year and no consecutive-year requirement. If you meet two of the three tests for this financial year and your group's start date has already passed, you report for this financial year.

Glossary›Regulation, capture and thresholds / Regulation, capture and timing›Sustainability reporting exemption

Glossary term

Cluster B · B24

Tier 1 · differentiator

Sustainability reporting exemption

Definition

A sustainability reporting exemption is any basis on which an entity above the size thresholds is not required to prepare a sustainability report. The most common is having no annual financial reporting obligation under Chapter 2M at all. Small proprietary companies, most registered charities, foreign-registered companies and entities holding ASIC reporting relief are outside the regime regardless of size.

Corporations Act 2001 (Cth) s 292A(1)

· capture conditional on an existing Chapter 2M financial reporting obligation ·

In force

On this page

In practice
What the assurer does with it
Commonly confused with
Timing and relief
Sources
Related terms
Related questions

Cluster

B · Regulation, capture and thresholds / Regulation, capture and timing, 26 terms

In practice

This is the term private companies get wrong in both directions, and each error is expensive.

The first error is assuming the regime is for listed companies. It is not. Section 292A applies to any entity with a Chapter 2M annual financial reporting obligation that meets a threshold. A privately held group with $60 million of revenue and $30 million of gross assets is a Group 3 entity from financial years commencing on or after 1 July 2027, with no listing, no public shareholders and no prior sustainability experience. Most such groups are not tracking this.

The second error is assuming that being above the numbers means being captured. Capture is conditional. Section 292A requires the entity to be one that “must prepare a financial report for the financial year under Chapter 2M”. If that obligation does not exist, the thresholds are never reached.

The exemption categories worth knowing, from ASIC’s own guidance:

Small proprietary companies with no Chapter 2M reporting obligation. A proprietary company below the large-company test, and not otherwise required to report, has no sustainability obligation.
Registered charities not required to prepare an annual financial report under Chapter 2M. ACNC-registered charities generally report to the ACNC instead, and that reporting is not Chapter 2M.
Foreign companies registered under Division 2 of Part 5B.2, and entities incorporated in a foreign jurisdiction. The obligation attaches to the Australian reporting entity, not to a foreign parent.
Entities holding ASIC relief from the annual financial report requirement. Relief instruments, including wholly-owned-subsidiary deeds of cross guarantee arrangements, can remove the financial report obligation and therefore the sustainability report obligation with it.
Entities below every section 292A threshold, provided they are not caught by the NGER limb, which captures a registered NGER corporation regardless of size.

One question this page deliberately does not answer. Whether an ASIC Instrument 2016/785 deed of cross guarantee removes the sustainability reporting obligation for closed-group members is not settled in public ASIC material. It is a live question for privately held groups and it turns on legal advice about a specific structure, not on a reading of the standards. Ask your adviser; do not infer an answer from the financial reporting relief.

The planning point is that an exemption is a position, not an absence. An entity relying on one should be able to name the instrument or the provision, and should re-test the position every year, because relief can be revoked and a grandfathered status can be lost by a change in shareholding.

What the assurer does with it

No assurance engagement exists over a report that is not prepared, so the testing happens in the financial statement audit instead. The financial auditor considers whether the entity has complied with the Corporations Act, and a missed sustainability report is a non-compliance. In practice they ask for the capture assessment, the threshold calculation, and the documented basis of any exemption relied on. They reject an exemption asserted verbally, an exemption based on a superseded relief instrument, and a threshold calculation using unconsolidated figures. Where the position is finely balanced, expect a request for external advice in writing, because the exposure sits with the directors.

Commonly confused with

The first-year reliefs inside AASB S2 Appendix C, which are reliefs from particular disclosures for an entity that is captured. An exemption means no sustainability report at all. A relief means a sustainability report with less in it. Also confused with the proposed increase to the large proprietary company thresholds. That proposal is not law. It was raised in the 2026-27 Federal Budget context and would, if enacted, remove a substantial number of proprietary companies from Chapter 2M and therefore from section 292A. Until it is enacted, the current thresholds apply.

Timing and relief

The exemption position is tested at each financial year end against that year’s figures. An entity that crosses into large proprietary company status, or into a section 292A threshold, is captured from the first financial year commencing on or after its group’s start date: 1 January 2025 for Group 1, 1 July 2026 for Group 2, 1 July 2027 for Group 3. There is no phase-in for an entity that grows into capture after its group’s start date; it reports for the first financial year in which it meets the test.