{"id":"F2021L00963","name":"Accounting Standard AASB 2021-5 Amendments to Australian Accounting Standards – Deferred Tax related to Assets and Liabilities arising from a Single Transaction","slug":"accounting-standard-aasb-2021-5-amendments-to-australian-accounting-standards-deferred-tax-related-t","collection":"legislative_instrument","jurisdiction":"commonwealth","status":"in_force","isInForce":true,"actNumber":null,"makingDate":null,"administeringDepartment":null,"currentVersion":{"id":101974,"registerId":"commonwealth-F2021L00963-current","compilationNumber":null,"startDate":"2026-04-03","status":"InForce","reasons":null,"registeredAt":null},"sections":[{"sectionNumber":"Obtaining a copy of this Accounting Stan","sectionType":"part","heading":"Obtaining a copy of this Accounting Standard","content":"# Obtaining a copy of this Accounting Standard\n\nThis Standard is available on the AASB website: www.aasb.gov.au.\n\nAustralian Accounting Standards Board\n\nPO Box 204\n\nCollins Street West\n\nVictoria 8007\n\nAUSTRALIA\n\nPhone: (03) 9617 7600\n\nE-mail: standard@aasb.gov.au\n\nWebsite: www.aasb.gov.au","sortOrder":0},{"sectionNumber":"Other enquiries","sectionType":"part","heading":"Other enquiries","content":"# Other enquiries\n\nPhone: (03) 9617 7600\n\nE-mail: standard@aasb.gov.au\n\nCOPYRIGHT\n\n© Commonwealth of Australia 2021\n\nThis AASB Standard contains IFRS Foundation copyright material. Reproduction within Australia in unaltered form (retaining this notice) is permitted for personal and non\\-commercial use subject to the inclusion of an acknowledgment of the source. Requests and enquiries concerning reproduction and rights for commercial purposes within Australia should be addressed to The National Director, Australian Accounting Standards Board, PO Box 204, Collins Street West, Victoria 8007.\n\nAll existing rights in this material are reserved outside Australia. Reproduction outside Australia in unaltered form (retaining this notice) is permitted for personal and non-commercial use only. Further information and requests for authorisation to reproduce for commercial purposes outside Australia should be addressed to the IFRS Foundation at www.ifrs.org.\n\nISSN 1036-4803","sortOrder":1},{"sectionNumber":"Contents","sectionType":"part","heading":"Contents","content":"# Contents\n\nPreface\n\nAccounting Standard\n\nAASB 2021-5 Amendments to Australian Accounting Standards – Deferred Tax related to Assets and Liabilities arising from a Single Transaction\n\nfrom page\n\nObjective 5\n\nApplication 5\n\nAmendments to AASB 1 5\n\nAmendments to AASB 112 6\n\nCommencement of the legislative instrument 9\n\naVailable on the AASB website\n\nIASB Basis for Conclusions – Amendments\n\nAustralian Accounting Standard AASB 2021-5 Amendments to Australian Accounting Standards – Deferred Tax related to Assets and Liabilities arising from a Single Transaction is set out on pages 5 – 9. All the paragraphs have equal authority.","sortOrder":2},{"sectionNumber":"Preface","sectionType":"part","heading":"Preface","content":"# Preface\n\n## Standards amended by AASB 2021-5\n\nThis Standard makes amendments to AASB 1 First-time Adoption of Australian Accounting Standards (July 2015) and AASB 112 Income Taxes (August 2015).\n\nThese amendments arise from the issuance of International Financial Reporting Standard Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12) by the International Accounting Standards Board (IASB) in May 2021.\n\n## Main features of this Standard\n\nMain requirements\n\nThis Standard amends AASB 112 to clarify the accounting for deferred tax on transactions that, at the time of the transaction, give rise to equal taxable and deductible temporary differences. In specified circumstances, entities are exempt from recognising deferred tax when they recognise assets or liabilities for the first time. The amendments clarify that the exemption does not apply to transactions for which entities recognise both an asset and a liability and that give rise to equal taxable and deductible temporary differences. This may be the case for transactions such as leases and decommissioning, restoration and similar obligations. Entities are required to recognise deferred tax on such transactions.\n\nThe Standard amends AASB 1 to require deferred tax related to leases and decommissioning, restoration and similar obligations to be recognised by first-time adopters at the date of transition to Australian Accounting Standards, despite the exemption set out in AASB 112.\n\nApplication date\n\nThis Standard applies to annual periods beginning on or after 1 January 2023. Earlier application is permitted.","sortOrder":3},{"sectionNumber":"Standards amended by AASB 2021-5","sectionType":"part","heading":"Standards amended by AASB 2021-5","content":"## Standards amended by AASB 2021-5\n\nThis Standard makes amendments to AASB 1 First-time Adoption of Australian Accounting Standards (July 2015) and AASB 112 Income Taxes (August 2015).\n\nThese amendments arise from the issuance of International Financial Reporting Standard Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12) by the International Accounting Standards Board (IASB) in May 2021.","sortOrder":4},{"sectionNumber":"Main features of this Standard","sectionType":"part","heading":"Main features of this Standard","content":"## Main features of this Standard\n\nMain requirements\n\nThis Standard amends AASB 112 to clarify the accounting for deferred tax on transactions that, at the time of the transaction, give rise to equal taxable and deductible temporary differences. In specified circumstances, entities are exempt from recognising deferred tax when they recognise assets or liabilities for the first time. The amendments clarify that the exemption does not apply to transactions for which entities recognise both an asset and a liability and that give rise to equal taxable and deductible temporary differences. This may be the case for transactions such as leases and decommissioning, restoration and similar obligations. Entities are required to recognise deferred tax on such transactions.\n\nThe Standard amends AASB 1 to require deferred tax related to leases and decommissioning, restoration and similar obligations to be recognised by first-time adopters at the date of transition to Australian Accounting Standards, despite the exemption set out in AASB 112.\n\nApplication date\n\nThis Standard applies to annual periods beginning on or after 1 January 2023. Earlier application is permitted.","sortOrder":5},{"sectionNumber":"Accounting Standard AASB 2021-5","sectionType":"part","heading":"Accounting Standard AASB 2021-5","content":"# Accounting Standard AASB 2021-5\n\nThe Australian Accounting Standards Board makes Accounting Standard AASB 2021-5 Amendments to Australian Accounting Standards – Deferred Tax related to Assets and Liabilities arising from a Single Transaction under section 334 of the Corporations Act 2001.\n\n| | Keith Kendall |\n| ------------------ | ------------- |\n| Dated 22 June 2021 | Chair – AASB |","sortOrder":6},{"sectionNumber":"Objective","sectionType":"part","heading":"Objective","content":"## Objective\n\nThis Standard amends AASB 1 First-time Adoption of Australian Accounting Standards (July 2015) and AASB 112 Income Taxes (August 2015) as a consequence of the issuance of International Financial Reporting Standard Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12) by the International Accounting Standards Board in May 2021.","sortOrder":8},{"sectionNumber":"Application","sectionType":"part","heading":"Application","content":"## Application\n\nThe amendments set out in this Standard apply to entities and financial statements in accordance with the application of AASB 1 and AASB 112 set out in AASB 1057 Application of Australian Accounting Standards.\n\nThis Standard applies to annual periods beginning on or after 1 January 2023. This Standard may be applied to annual reporting periods beginning before 1 January 2023.\n\nThis Standard uses underlining, striking out and other typographical material to identify some of the amendments to a Standard, in order to make the amendments more understandable. However, the amendments made by this Standard do not include that underlining, striking out or other typographical material. Ellipses (…) are used to help provide the context within which amendments are made and also to indicate text that is not amended.","sortOrder":9},{"sectionNumber":"Amendments to AASB 1 First-time Adoption","sectionType":"part","heading":"Amendments to AASB 1 First-time Adoption of Australian Accounting Standards","content":"## Amendments to AASB 1 First-time Adoption of Australian Accounting Standards\n\n| Paragraph 39AH is added. In Appendix B, paragraph B1 is amended and paragraph B14 and its heading are added. Deleted text is struck through and new text is underlined. |\n| ----------------------------------------------------------------------------------------------------------------------------------------------------------------------- |\n\nEffective date\n\n ...\n 39AH AASB 2021-5 Amendments to Australian Accounting Standards – Deferred Tax related to Assets and Liabilities arising from a Single Transaction, issued in June 2021, amended paragraph B1 and added paragraph B14. An entity shall apply these amendments for annual reporting periods beginning on or after 1 January 2023. Earlier application is permitted. If an entity applies the amendments for an earlier period, it shall disclose that fact.\n ...\n\nAppendix B \nExceptions to the retrospective application of other Australian Accounting Standards\n\nThis appendix is an integral part of the Standard.\n\n B1 An entity shall apply the following exceptions:\n ...\n (g) government loans (paragraphs B10–B12); and\n (h) insurance contracts (paragraph B13); and.\n (i) deferred tax related to leases and decommissioning, restoration and similar liabilities (paragraph B14).\n ...\n\nDeferred tax related to leases and decommissioning, restoration and similar liabilities\n\n B14 Paragraphs 15 and 24 of AASB 112 Income Taxes exempt an entity from recognising a deferred tax asset or liability in particular circumstances. Despite this exemption, at the date of transition to Australian Accounting Standards, a first-time adopter shall recognise a deferred tax asset – to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilised – and a deferred tax liability for all deductible and taxable temporary differences associated with:\n (a) right-of-use assets and lease liabilities; and\n (b) decommissioning, restoration and similar liabilities and the corresponding amounts recognised as part of the cost of the related asset.","sortOrder":10},{"sectionNumber":"Amendments to AASB 112 Income Taxes","sectionType":"part","heading":"Amendments to AASB 112 Income Taxes","content":"## Amendments to AASB 112 Income Taxes\n\n| Paragraphs 15, 22 and 24 are amended. Paragraphs 22A and 98J–98L are added. Deleted text is struck through and new text is underlined. |\n| -------------------------------------------------------------------------------------------------------------------------------------- |\n\nRecognition of deferred tax liabilities and deferred tax assets\n\nTaxable temporary differences\n\n 15 A deferred tax liability shall be recognised for all taxable temporary differences, except to the extent that the deferred tax liability arises from:\n (a) the initial recognition of goodwill; or\n (b) the initial recognition of an asset or liability in a transaction which:\n (i) is not a business combination; and\n (ii) at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss); and.\n (iii) at the time of the transaction, does not give rise to equal taxable and deductible temporary differences.\n ...\n\nInitial recognition of an asset or liability\n\n 22 A temporary difference may arise on initial recognition of an asset or liability, for example if part or all of the cost of an asset will not be deductible for tax purposes. The method of accounting for such a temporary difference depends on the nature of the transaction that led to the initial recognition of the asset or liability:\n (a) in a business combination, an entity recognises any deferred tax liability or asset and this affects the amount of goodwill or bargain purchase gain it recognises (see paragraph 19);\n (b) if the transaction affects either accounting profit or taxable profit, or gives rise to equal taxable and deductible temporary differences, an entity recognises any deferred tax liability or asset and recognises the resulting deferred tax expense or income in profit or loss (see paragraph 59);\n (c) if the transaction is not a business combination, and affects neither accounting profit nor taxable profit and does not give rise to equal taxable and deductible temporary differences, an entity would, in the absence of the exemption provided by paragraphs 15 and 24, recognise the resulting deferred tax liability or asset and adjust the carrying amount of the asset or liability by the same amount. Such adjustments would make the financial statements less transparent. Therefore, this Standard does not permit an entity to recognise the resulting deferred tax liability or asset, either on initial recognition or subsequently (see example below). Furthermore, an entity does not recognise subsequent changes in the unrecognised deferred tax liability or asset as the asset is depreciated.\n ...\n 22A A transaction that is not a business combination may lead to the initial recognition of an asset and a liability and, at the time of the transaction, affect neither accounting profit nor taxable profit. For example, at the commencement date of a lease, a lessee typically recognises a lease liability and the corresponding amount as part of the cost of a right-of-use asset. Depending on the applicable tax law, equal taxable and deductible temporary differences may arise on initial recognition of the asset and liability in such a transaction. The exemption provided by paragraphs 15 and 24 does not apply to such temporary differences and an entity recognises any resulting deferred tax liability and asset.\n ...\n\nDeductible temporary differences\n\n 24 A deferred tax asset shall be recognised for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilised, unless the deferred tax asset arises from the initial recognition of an asset or liability in a transaction that:\n (a) is not a business combination; and\n (b) at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss); and.\n (c) at the time of the transaction, does not give rise to equal taxable and deductible temporary differences.\n ...\n\nEffective date\n\n ...\n 98J AASB 2021-5 Amendments to Australian Accounting Standards – Deferred Tax related to Assets and Liabilities arising from a Single Transaction, issued in June 2021, amended paragraphs 15, 22 and 24 and added paragraph 22A. An entity shall apply these amendments in accordance with paragraphs 98K–98L for annual reporting periods beginning on or after 1 January 2023. Earlier application is permitted. If an entity applies the amendments for an earlier period, it shall disclose that fact.\n 98K An entity shall apply AASB 2021-5 to transactions that occur on or after the beginning of the earliest comparative period presented.\n 98L An entity applying AASB 2021-5 shall also, at the beginning of the earliest comparative period presented:\n (a) recognise a deferred tax asset – to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilised – and a deferred tax liability for all deductible and taxable temporary differences associated with:\n (i) right-of-use assets and lease liabilities; and\n (ii) decommissioning, restoration and similar liabilities and the corresponding amounts recognised as part of the cost of the related asset; and\n (b) recognise the cumulative effect of initially applying the amendments as an adjustment to the opening balance of retained earnings (or other component of equity, as appropriate) at that date.\n\n| Example 8 is added to the Illustrative examples accompanying AASB 112. For ease of reading, new text has not been underlined. |\n| ----------------------------------------------------------------------------------------------------------------------------- |\n\nIllustrative examples\n\n> Note: These illustrative examples accompany, but are not part of, AASB 112.\n\n …\n\nIllustrative computations and presentation\n\n ...\n\nExample 8 – Leases\n\nLease\n\nAn entity (Lessee) enters into a five-year lease of a building. The annual lease payments are CU100 payable at the end of each year. Before the commencement date of the lease, Lessee makes a lease payment of CU15 (advance lease payment) and pays initial direct costs of CU5. The interest rate implicit in the lease cannot be readily determined. Lessee’s incremental borrowing rate is 5% per year.\n\nAt the commencement date, applying AASB 16 Leases, Lessee recognises a lease liability of CU435 (measured at the present value of the five lease payments of CU100, discounted at the interest rate of 5% per year). Lessee measures the right-of-use asset (lease asset) at CU455, comprising the initial measurement of the lease liability (CU435), the advance lease payment (CU15) and the initial direct costs (CU5).\n\nTax law\n\nThe tax law allows tax deductions for lease payments (including those made before the commencement date) and initial direct costs when an entity makes those payments. Economic benefits that will flow to Lessee when it recovers the carrying amount of the lease asset will be taxable.\n\nA tax rate of 20% is expected to apply to the period(s) when Lessee will recover the carrying amount of the lease asset and will settle the lease liability.\n\nAfter considering the applicable tax law, Lessee concludes that the tax deductions it will receive for lease payments relate to the repayment of the lease liability.[\\[1\\]](#_ftn1)\n\nDeferred tax on the advance lease payment and initial direct costs\n\nLessee recognises the advance lease payment (CU15) and initial direct costs (CU5) as components of the lease asset’s cost. The tax base of these components is nil because Lessee already received tax deductions for the advance lease payment and initial direct costs when it made those payments. The difference between the tax base (nil) and the carrying amount of each component results in taxable temporary differences of CU15 (related to the advance lease payment) and CU5 (related to the initial direct costs).\n\nThe exemption from recognising a deferred tax liability in paragraph 15 does not apply because the temporary differences arise from transactions that, at the time of the transactions, affect Lessee’s taxable profit (that is, the tax deductions Lessee received when it made the advance lease payment and paid initial direct costs reduced its taxable profit). Accordingly, Lessee recognises a deferred tax liability of CU3 (CU15 × 20%) and CU1 (CU5 × 20%) for the taxable temporary differences related to the advance lease payment and initial direct costs, respectively.\n\nDeferred tax on the lease liability and related component of the lease asset’s cost\n\nAt the commencement date, the tax base of the lease liability is nil because Lessee will receive tax deductions equal to the carrying amount of the lease liability (CU435). The tax base of the related component of the lease asset’s cost is also nil because Lessee will receive no tax deductions from recovering the carrying amount of that component of the lease asset’s cost (CU435).\n\nThe differences between the carrying amounts of the lease liability and the related component of the lease asset’s cost (CU435) and their tax bases of nil result in the following temporary differences at the commencement date:\n\n(a) a taxable temporary difference of CU435 associated with the lease asset; and\n\n(b) a deductible temporary difference of CU435 associated with the lease liability.\n\nThe exemption from recognising a deferred tax asset and liability in paragraphs 15 and 24 does not apply because the transaction gives rise to equal taxable and deductible temporary differences. Lessee concludes that it is probable that taxable profit will be available against which the deductible temporary difference can be utilised. Accordingly, Lessee recognises a deferred tax asset and a deferred tax liability, each of CU87 (CU435 × 20%), for the deductible and taxable temporary differences.\n\nSummary of recognised deferred tax\n\nThe table below summarises the deferred tax that Lessee recognises on initial recognition of the lease (including the advance lease payment and initial direct costs):\n\n```html\n

Carrying amount

Tax base

Deductible / (taxable) temporary difference

Deferred tax asset /
(liability)

Lease asset

–

advance lease payment

15

—

(15)

(3)

–

initial direct costs

5

—

(5)

(1)

–

the amount of the initial measurement of the lease liability

435

—

(435)

(87)

Lease liability

435

—

435

87

\n```\n\nApplying paragraph 22(b) of AASB 112, Lessee recognises deferred tax assets and liabilities as illustrated in this example and recognises the resulting deferred tax income or expense in profit or loss.","sortOrder":11},{"sectionNumber":"Commencement of the legislative instrume","sectionType":"part","heading":"Commencement of the legislative instrument","content":"## Commencement of the legislative instrument\n\nFor legal purposes, this legislative instrument commences on 31 December 2022.","sortOrder":12}],"analysis":{"flash_summary":{"complexity_score":4,"scope_assessment":{"changed":false,"description":"The amendments stay within the original, narrow purpose: to clarify recognition of deferred tax where a single transaction gives rise to equal taxable and deductible temporary differences. They align Australian Standards with the IASB amendment rather than expanding the regulatory scope to new subject matter. The only substantive extension is tightening the scope of the existing initial‑recognition exemption (it no longer applies where both an asset and a liability arise and give equal temporary differences) and requiring first‑time adopters to recognise certain deferred tax at transition (AASB 1 para B14; AASB 112 paras 22A, 98K–98L). These are changes in recognition and transition mechanics rather than a growth beyond the amendment’s stated objective."},"complexity_factors":["Amendments to multiple standards: AASB 112 and AASB 1 (cross‑references to AASB 1057 for application scope).","Three existing paragraphs amended (15, 22, 24) and one new paragraph added (22A) in AASB 112.","New transition and application paragraphs added (98J–98L) setting comparative and opening balance requirements.","Addition to AASB 1 Appendix B (paragraph B14) with a specific exception for first‑time adopters.","Illustrative Example 8 (leases) included to demonstrate application — involves multi‑line numerical computations.","Dependency on tax law interpretation and probability judgements (probable taxable profit) increases practical complexity.","Limited length but multiple cross‑references and conditional logic (when exemption does or does not apply)."],"plain_english_summary":"**What this amendment does (mechanically)\n\n- Amends AASB 112 (Income Taxes) and AASB 1 (First‑time Adoption) to change how deferred tax is recognised for certain transactions that give rise to both an asset and a liability at the same time (a \"single transaction\").\n- Specifically, it narrows the existing \"initial recognition\" exemption so that it does not apply where a single transaction creates both an asset and a liability and, at the time of the transaction, gives rise to equal taxable and deductible temporary differences (for example, many leases and decommissioning/restoration obligations). Such temporary differences must now have deferred tax assets and liabilities recognised on initial recognition (see AASB 112 paras 15, 22, 24 and new para 22A).\n- For first‑time adopters of Australian Accounting Standards, the change requires recognition of deferred tax relating to right‑of‑use (lease) assets, lease liabilities, and decommissioning/restoration (and similar) liabilities at the date of transition, even though AASB 112 otherwise contains an exemption (see AASB 1 Appendix B para B14 and AASB 112 paras 98K–98L).\n- The Standard includes an illustrative worked example (Example 8) showing application to a lease (how taxable and deductible temporary differences arise and how deferred tax assets and liabilities are recognised).\n- Application/commencement: applies to annual periods beginning on or after 1 January 2023; earlier application is permitted. The legislative instrument commenced 31 December 2022.\n\nWho this affects\n\n- Companies and other reporting entities that prepare financial statements under Australian Accounting Standards and recognise both an asset and a liability from the same transaction — most notably lessees applying AASB 16 (leases) and entities recognising decommissioning, restoration and similar obligations.\n- First‑time adopters of Australian Accounting Standards (they must recognise certain deferred tax amounts on transition).\n- Management, preparers and auditors of financial statements, and users of those statements (investors, lenders, analysts) because reported deferred tax, profit and opening equity can change.\n\nWhy it matters (practical effects and mechanics)\n\n- Recognition change: Entities that previously relied on the initial recognition exemption to avoid recognising deferred tax for some single transactions must now recognise both the deferred tax asset and liability where equal deductible and taxable temporary differences arise (AASB 112 para 22A). That changes the amounts shown in the balance sheet and the timing of profit/expense recognition (deferred tax expense/income in profit or loss).\n- Transition accounting: First‑time adopters must add certain deferred tax amounts to opening retained earnings (or other appropriate equity component) at the transition date (AASB 112 para 98L).\n- Measurement and judgement: Entities must identify the tax bases of the new asset and liability components, calculate temporary differences, apply the appropriate tax rates, and judge whether it is probable taxable profits will exist to use deductible temporary differences (AASB 112 paras 24, 22A). This requires tax law interpretation and forecasts about future taxable profit.\n\nCosts, incentives, trade‑offs and implementation risks (concrete mechanics)\n\n- Compliance burden: Preparers must update accounting policies, systems and tax trackers to measure tax bases for right‑of‑use assets, lease liabilities and decommissioning liabilities. That raises one‑off transition costs and ongoing computational effort (paras 98K–98L, B14).\n- Judgement and volatility: Recognising both deferred tax asset and liability introduces additional estimates (probability of future taxable profit, tax rates, timing). That can increase earnings and equity volatility and audit work.\n- No change to tax cash flows: The amendment changes only accounting recognition, not the company’s actual tax payments. It alters reported deferred tax balances and equity/profit timing but not the legal tax liability.\n- Behavioural or structuring incentives: Because the amendment affects reported financials but not tax cash flows, some entities might reassess lease structuring or the timing of payments to influence accounting outcomes. The Standard does not change taxation rules — it just requires that accounting reflect the temporary differences where both asset and liability arise.\n- First‑time adopters face concentrated adjustment costs: Entities moving onto Australian Accounting Standards must recognise opening deferred tax amounts for leases and decommissioning items, producing a concentrated one‑off equity adjustment at transition (AASB 1 para B14; AASB 112 para 98L).\n- Implementation risk across jurisdictions: Application depends on the interaction between accounting recognition and local tax law (what givess tax deductions and when). Differences across tax jurisdictions increase the need for tax interpretation and can cause inconsistencies and additional compliance cost (illustrated in Example 8).\n\nWho pays, who decides, and what behaviour changes\n\n- Who pays: preparers bear the compliance and measurement costs (accounting, tax advisory, systems). Investors and lenders bear indirect costs in the form of changes to reported equity and profit timing that may affect covenants, reported performance and valuations.\n- Who decides: entity management prepares and applies the accounting judgments (with auditor review). The AASB has set the accounting rule; tax authorities have not changed tax law — they remain the decision‑makers for tax cash flows.\n- Behaviour changes: entities must recognise deferred tax in the situations described (e.g. leases, decommissioning). They will need to track tax bases and forecast taxable profits; first‑time adopters will make an opening equity adjustment. Some preparers may review contract and payment structuring to manage accounting impacts, but the Standard itself does not alter tax law.\n\nReference to the amended paragraphs: AASB 112 paras 15, 22 (amended), new para 22A, para 24 (amended), paras 98J–98L (effective date and transition); AASB 1 Appendix B para B14 (first‑time adopter exception). The Standard includes illustrative Example 8 (leases) to show mechanics.\n\nPurpose claims and a brief test against trade‑offs\n\n- The stated purpose (as set out in the Standard) is to clarify the recognition of deferred tax where a single transaction gives rise to equal taxable and deductible temporary differences; the change aligns Australian practice with the IASB amendment. Mechanically, the change narrows the exemption in AASB 112 and forces recognition in those cases.\n- Trade‑offs: clarity and comparability of financial statements are increased (by eliminating an avoidance of deferred tax in these cases), but at the cost of additional measurement complexity, judgement and one‑off transition adjustments for first‑time adopters. The amendment increases accounting transparency of tax timing differences for leases and similar transactions, while leaving tax cash flows unchanged.\n"},"flash_summary_failed":{"failed":true,"reason":"Unauthenticated. Configure AI_GATEWAY_API_KEY or use a provider module. Learn more: https://ai-sdk.dev/unauthenticated-ai-gateway","source":"analysis-cron"},"kimi_summary":{"content_quality":"ok","complexity_score":7,"scope_assessment":{"changed":false,"description":"The legislation remains tightly focused on its original purpose: clarifying deferred tax treatment for specific transactions (leases and decommissioning obligations) that create equal temporary differences. The amendments do not expand beyond the IASB's May 2021 amendments to IAS 12, maintaining alignment with international standards without scope creep."},"complexity_factors":["Nested exemption logic: The amendments modify existing exemptions in paragraphs 15 and 24 of AASB 112 by adding a third condition (15(b)(iii) and 24(c)) that creates an exception to the exemption","Cross-referencing between standards: Requires simultaneous reading of AASB 2021-5, AASB 112, AASB 1, and AASB 16 (Leases) to fully understand the application","Technical accounting terminology: Heavy use of specialised terms including 'taxable temporary differences', 'deductible temporary differences', 'tax base', 'carrying amount', and 'right-of-use assets' without inline definitions","Bifurcated application requirements: Different transition rules for existing preparers (paragraphs 98J-98L) versus first-time adopters (paragraph B14)","Detailed numerical example: The illustrative example (Example 8) runs over 1,000 words with complex present value calculations and multi-component asset analysis","Conditional probability threshold: Requires assessment of whether 'it is probable that taxable profit will be available' for deferred tax asset recognition","Dual effective dates: Commencement date for legal purposes (31 December 2022) differs from application date for accounting purposes (1 January 2023)"],"plain_english_summary":"This change requires Australian companies to recognise deferred tax when a single transaction creates offsetting taxable and deductible temporary differences—most notably leases and environmental restoration/decommissioning obligations. It closes a prior exemption that let some firms omit such deferred tax.\n\nIt affects lessees, entities with restoration liabilities (mining, oil & gas, infrastructure) and first-time adopters, applies to annual reports from 1 Jan 2023, and improves transparency by ensuring future tax effects appear on the balance sheet."}},"importantCases":[],"_links":{"self":"/api/acts/accounting-standard-aasb-2021-5-amendments-to-australian-accounting-standards-deferred-tax-related-t","history":"/api/acts/accounting-standard-aasb-2021-5-amendments-to-australian-accounting-standards-deferred-tax-related-t/history","analysis":"/api/acts/accounting-standard-aasb-2021-5-amendments-to-australian-accounting-standards-deferred-tax-related-t/analysis","conflicts":"/api/acts/accounting-standard-aasb-2021-5-amendments-to-australian-accounting-standards-deferred-tax-related-t/conflicts","importantCases":"/api/acts/accounting-standard-aasb-2021-5-amendments-to-australian-accounting-standards-deferred-tax-related-t/important-cases","documents":"/api/acts/accounting-standard-aasb-2021-5-amendments-to-australian-accounting-standards-deferred-tax-related-t/documents"}}