Reporting Significant Global Entity Status for Large Private Groups

Knowledge • Reporting Significant Global Entity Status for Large Private Groups

Reporting Significant Global Entity Status for Large Private Groups
What Every Large Private Group Needs to Know

Privately owned and wealthy groups are required to assess whether they are Significant Global Entities (“SGE”) and complete their income tax returns accordingly.
This guidance provides clarity to taxpayers on their SGE status and where self assessment leads to low risk scenarios.

What is considered as “privately owned and wealthy groups”?

Privately owned and wealthy groups are viewed as:

Australian resident individuals who, together with their business associates, control net wealth over AUD 5 million; or
Companies and their associated subsidiaries (often referred to as economic groups) with an annual turnover of more than AUD 10 million and that are not public groups or foreign owned.

What is SGE?

An entity is an SGE for a period if it is any of the following:

a global parent entity (“GPE”) with an annual global income of AUD 1 billion or more;
a member of a group of entities consolidated for accounting purposes as a single group and one of the other group members is a GPE with an annual global income of AUD 1 billion or more; or
a member of a notional listed company group and one of the other group members is a GPE with an annual global income of AUD 1 billion or more.

A small local company can be treated as an SGE if it is part of a large global group. The Australian Taxation Office (“ATO”)’s definition of SGE applies to:

entities in private groups, including individuals, private companies, trusts, partnerships, self-managed superannuation funds, and any entities that would be exempt from consolidation.
applies regardless of whether consolidated financial statements are actually prepared.

The SGE definition is not limited to multinational groups. It can apply to entities in wholly domestic private groups.

Self-Assessment of SGE and Record-Keeping

Once the SGE definition is met, the taxpayer must complete the SGE label in its income tax return to disclose its SGE status for that year.

When self-assessing taxpayers are required to prepare and retain relevant records supporting the assessment outcome, these include:

Assessment of control (i.e. shareholding structure or contractual/other arrangements that give rise to voting rights);
Consolidated financial statements or, if unavailable, stand-alone financial statements for each member of the group.
Calculations of total annual income or annual global income of all members of the group.

Low-Risk Groups / Scenarios

The ATO has outlined two (2) “low-risk groups” to support taxpayers in mitigating and managing risks of incorrect SGE classification. These low-risk groups are summarised in the table below:

Low-Risk Group

Criteria

Category 1: Domestic Operations

A private group may be considered low risk if:

All entities are Australian‑resident, with no overseas operations or related parties.
The group has a strong compliance history over the last 5 years (timely lodgments, no administrative or promoter‑penalty issues).
Any required CbCR or financial statement reporting has been properly completed.

Category 2: Total Income Under AUD 1 Billion

The group includes Australian and/or offshore entities, ultimately owned or controlled by individuals.
The group maintains accurate and up‑to‑date records, including financial statements, to self‑assess SGE status.
The combined income of all group entities and individuals is below AUD 1 billion for the income year. The income calculation covers all related or potentially controlled entities across the structure (companies, trusts, partnerships).

Why It Matters to You

Changes to the SGE definition have surprised some private groups, as the expanded definition now includes structures that were previously excluded, such as individuals and partnerships.

Even if the Australian operations are small, an entity may still be an SGE due to its global ownership structure. Annual assessment is important as penalties for errors can be severe.

SCG for Large Private Groups

Supporting MNEs across Australia and Asia Pacific.

Reporting Significant Global Entity Status for Large Private Groups