Document ID: chunk:federal_register_of_legislation:F2023L01301:body:0:p6
Version: federal_register_of_legislation:F2023L01301
Segment Type: other
Provision Reference: 
Character Range: 14842–18049

for SMEs Accounting Standard or between Tier 1 and Tier 2 entities in Australia in respect of Pillar Two income taxes, the Board considers that Tier 2 entities applying the mandatory temporary exception should be required to include some disclosures in their financial statements to help users understand the effect of Pillar Two legislation on the financial statements.
     BC15            In addition, the Board noted that the IASB proposed amendments to the IFRS for SMEs Standard, issuing Exposure Draft IASB/ED/2023/3 International Tax Reform – Pillar Two Model Rules – Proposed amendments to the IFRS for SMEs Standard in June 2023.  IASB/ED/2023/3 proposes amendments to the IFRS for SMEs Standard that would:
          (a)                    introduce a temporary exception to accounting for deferred taxes arising from the implementation of the Pillar Two model rules;
          (b)                   introduce targeted disclosure requirements in periods when Pillar Two legislation is in effect; and
          (c)                    clarify that 'other events' in the disclosure objective for income tax include enacted or substantively enacted Pillar Two legislation.
     BC16            Therefore, the Board decided to propose amendments to AASB 1060 to require Tier 2 entities applying the temporary exception to include targeted disclosures in their financial statements.

     Disclosures
     BC17            As noted in paragraph BC6, a Tier 2 entity is required to apply the mandatory temporary exception to accounting for deferred taxes arising from the implementation of the Pillar Two model rules in AASB 112.  To make the application of the exception transparent, the Board proposed requiring Tier 2 entities applying the temporary exception to disclose that fact.
     BC18            In addition, consistent with the IASB's proposed approach to amending the IFRS for SMEs Standard, the Board decided:
          (a)                    in relation to periods before relevant Pillar Two legislation is in effect, not to propose specific disclosure requirements; and
          (b)                   in relation to periods when relevant legislation is in effect, to propose requiring an entity to disclose its current tax expense (income) related to Pillar Two income taxes.
     BC19            In making these decisions, the Board considered that:
          (a)                    it was not necessary to add a new disclosure requirement for periods before relevant Pillar Two legislation is in effect because the existing disclosure requirement in paragraph 176 would be expected to result in Tier 2 entities affected by Pillar Two legislation providing some information about the nature and financial effect of enacted or substantively enacted Pillar Two legislation before it applies.  However, the Board decided to propose clarifying that the reference in paragraph 176 to 'other events' includes enacted or substantively enacted Pillar Two legislation; and
          (b)                   requiring a Tier 2 entity to disclose its current tax expense (income) related to Pillar Two income taxes when relevant legislation is in effect would help users of the financial statements