Document ID: chunk:federal_register_of_legislation:F2021L00963:body:0:p5
Version: federal_register_of_legislation:F2021L00963
Segment Type: other
Provision Reference: 
Character Range: 10975–13823

liability in a transaction that:
(a) is not a business combination; and
(b) at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss); and.
(c) at the time of the transaction, does not give rise to equal taxable and deductible temporary differences.
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Effective date
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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.
98K An entity shall apply AASB 2021-5 to transactions that occur on or after the beginning of the earliest comparative period presented.
98L An entity applying AASB 2021-5 shall also, at the beginning of the earliest comparative period presented:
(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:
(i) right-of-use assets and lease liabilities; and
(ii) decommissioning, restoration and similar liabilities and the corresponding amounts recognised as part of the cost of the related asset; and
(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.

Example 8 is added to the Illustrative examples accompanying AASB 112. For ease of reading, new text has not been underlined.

Illustrative examples
These illustrative examples accompany, but are not part of, AASB 112.
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Illustrative computations and presentation
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Example 8 – Leases

Lease
An 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.
At 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).

Tax law
The tax law