Document ID: chunk:federal_register_of_legislation:F2022L01562:body:0:p28
Version: federal_register_of_legislation:F2022L01562
Segment Type: other
Provision Reference: 
Character Range: 72491–75575

deferred tax liabilities; and
(b)          ensure that the written opinions are updated in the event of changes in laws or taxation practices overseas that could materially impact on overseas taxation authorities continuing to allow netting of deferred tax assets and deferred tax liabilities.

Equity exposures and other capital support provided to commercial (non-financial) entities
28.         Unless otherwise indicated, an ADI must deduct direct, indirect[25] and synthetic equity exposures[26], guarantees and other capital support provided to commercial (non-financial) institutions. This includes:
(a)          equity exposures, guarantees and other capital support held in the banking book; and
(b)          underwriting positions in equities held for more than five business days.
An ADI is not required to deduct:
(c)          equity exposures in the ADI's trading book. Such exposures must be treated in accordance with the provisions in APS 116;
(d)          underwriting positions of equities held for five working days or less. Such exposures must be risk-weighted at 250 per cent if listed and at 400 per cent if unlisted; or
(e)          equity exposures held under a legal agreement on behalf of a third party, even if held in the name of the ADI (or other member of the Level 2 group), where the third party derives exclusively and irrevocably all the gains and losses of such exposures and investments.

Gains and losses arising from changes in own creditworthiness
29.         An ADI must eliminate all unrealised gains and losses that have resulted from changes in the value of liabilities (including capital instruments) and any associated embedded derivatives, due to changes in the ADI's own creditworthiness. Additional Tier 1 Capital and Tier 2 Capital instruments must continue to be measured for capital adequacy purposes at their contractual values. Additional Tier 1 Capital and Tier 2 Capital instruments can be hedged in accordance with accounting standards.

Goodwill and other intangibles
30.         An ADI must deduct the following, net of any associated deferred tax assets and deferred tax liabilities that would be extinguished if the assets involved become impaired or derecognised under Australian Accounting Standards:
(a)          goodwill and any other intangible assets[27] arising from an acquisition, net of adjustments to profit or loss reflecting any changes arising from 'impairment' of goodwill (at Level 1, intangibles also include the intangible components of investments in subsidiaries that could arise in relation to acquisitions); and
(b)          other intangible assets net of adjustments to profit or loss reflecting amortisation and impairment. Intangible assets are as defined in Australian Accounting Standards and include capitalised expenses, capitalised transaction costs and mortgage servicing rights. These include, but are not limited to:
(i)            loan/lease origination/broker fees and commissions that are capitalised as an asset which are to be set off against the balance of any corresponding loan/lease