Document ID: chunk:federal_register_of_legislation:F2023C00402:reg:97:p24
Version: federal_register_of_legislation:F2023C00402
Segment Type: reg
Provision Reference: reg 97 (pt 24/56)
Character Range: 325877–328930

to all public sector entities including for-profit entities was the result of a decision made specifically in the context of that project.

Features of licences
     BC16            The Board noted that AASB 15 provides some examples of IP licences but none of the Australian Accounting Standards (including AASB 15) describe what a licence is. The Board considered that it would be helpful for licensors in the NFP public sector for the Board to provide guidance in the Standard on identifying the features of a licence. This would help distinguish revenue arising from licences, accounted for in accordance with this Standard, and revenue arising from taxes, accounted for in accordance with AASB 1058.

     BC17            In identifying the features of a licence, the Board considered:

          (a)                    the extent to which current Australian Accounting Standards define or infer features of licences, in particular AASB 1058;

          (b)                   the features of a licence considered by the International Public Sector Accounting Standards Board (IPSASB) in its projects; and

          (c)                    other resources, including the ABS GFS Manual, commonly accepted definitions, law and other common features of licences issued by NFP public sector licensors.

AASB 1058 Income of Not-For-Profit Entities: distinguishing a licence from a tax
     BC18            The Board noted that AASB 1058 defines and prescribes the accounting for taxes. Although AASB 1058 uses the term 'licence', it is not defined, but the inference is that licences and taxes are different in nature. Therefore, the distinction between licences and taxes should, as a starting point, be drawn from the AASB 1058 definition of 'taxes', which is:

          Economic benefits compulsorily paid or payable to public sector entities in accordance with laws and/or regulations to provide income to the government. Taxes exclude fines.

     BC19            The Board noted this definition of 'taxes' identifies two points of distinction, being:

          (a)                    the notion of compulsion; and

          (b)                   the purpose of the payment.

     BC20            In relation to compulsion, the Board observed that, in contrast to a tax, although a licence fee may be compulsorily payable upon issue, a prospective licensee has discretion over whether to seek a licence. For example, an entity would generally have discretion over whether to perform an activity that requires a licence, whereas a tax would arise generally from activities that are necessary for the entity to operate, for example earning revenue. The Board also observed that the notion of compulsion could be supported by the consequences of evading a licence fee or tax. For example, if an entity were found to have evaded a licence fee, it would not be compulsory for the entity to retrospectively obtain the licence. Any consequence for undertaking unlicensed activities would be in the nature of a fine or other penalty (ie the entity would