Document ID: chunk:federal_register_of_legislation:F2024L00075:reg:38:p29
Version: federal_register_of_legislation:F2024L00075
Segment Type: reg
Provision Reference: reg 38 (pt 29/76)
Character Range: 113796–116951

BC54            Several respondents to ED 179 expressed disagreement with the proposal to adjust fair value amounts for transaction costs because:
(a)                   the treatment is inconsistent with the approach required under most Australian Accounting Standards, including AASB 139 Financial Instruments: Recognition and Measurement;[4] and
(b)                   transaction costs are generally an immaterial amount relative to a superannuation entity's net assets.
BC55            During its redeliberations on ED 179, the AASB also noted:
(a)                   AASB 13 requires that, while transaction costs be considered when determining the most advantageous market, the price used to measure the fair value of an asset (or liability) should, in principle, not be adjusted for such costs.  As noted in paragraph 25 of AASB 13:
"… Transaction costs are not a characteristic of an asset or a liability; rather, they are specific to a transaction and will differ depending on how an entity enters into a transaction for the asset or liability…"; and
(b)                   defined contribution members and beneficiaries would regard information about assets net of transaction costs as useful because it may help clarify whether all members and beneficiaries are being treated equitably, including different generations of members.[5]  However, the AASB rejected the intergenerational equity argument, noting that it would be better facilitated by a superannuation entity determining crediting rates for defined contribution members on a basis that reflects anticipated transaction costs.  The AASB also noted that these types of intergenerational equity issues are not as relevant in a defined benefit context because benefits are determined on the basis of a member's salary.
BC56            In light of respondents' comments, ED 223 proposed not permitting the carrying amounts of assets measured at fair value to be adjusted for transaction costs.  The AASB also proposed that, to facilitate consistency across superannuation entities in relation to transaction costs, the application of AASB 5 should be prohibited.
BC57            There was general support from constituents commenting on the asset measurement proposals in ED 223 and the AASB concluded fair values should not be adjusted for transaction costs.

Measurement of liabilities other than tax liabilities, member liabilities and liabilities arising from insurance arrangements provided to members
BC58            AAS 25 required a superannuation plan to measure its financial liabilities at net market value.
BC59            During its deliberations on the proposals in ED 179 and ED 223, the AASB considered the different ways in which a liability can be measured under Australian Accounting Standards, in particular:
(a)                   at fair value; and
(b)                   at amortised cost.
BC60            The AASB decided amortised cost is not an appropriate basis in a superannuation context because it would not result in useful information to users.  Accordingly, the AASB proposed that a superannuation entity should measure its liabilities at fair value, with the