Document ID: chunk:federal_register_of_legislation:F2023L01301:body:0:p5
Version: federal_register_of_legislation:F2023L01301
Segment Type: other
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Character Range: 11944–15091

better understand an entity's exposure to income taxes arising from the reform, particularly in periods before legislation implementing the rules is in effect.
     BC6               The mandatory temporary exception and related disclosures noted in paragraph BC5 apply to both Tier 1 and Tier 2 entities.[1]
     BC7               However, to ensure Tier 2 entities are required to comply with disclosure requirements set out in AASB 1060 rather than the new requirements in AASB 112, the Board proposed to amend Appendix A of AASB 112 to extend the exemption from compliance with the disclosure requirements of AASB 112 for entities applying AASB 1060 to include the disclosure requirements added to AASB 112 by AASB 2023-2.
     BC8               In considering whether to propose amendments to AASB 1060 to require targeted disclosures by Tier 2 entities, the Board considered that the Pillar Two model rules could have a material effect on the financial statements of Tier 2 entities.  For example, some subsidiaries of large multinational groups may be affected by Pillar Two legislation.[2]

Issue of Exposure Draft ED 325
     BC9               The Board's proposals with respect to the amendments finalised in this Standard were exposed for public comment in July 2023 through Exposure Draft ED 325 International Tax Reform – Pillar Two Model Rules: Tier 2 Disclosures.
     BC10            The significant issues considered by the Board in developing ED 325 are addressed in the following section.

     Relevance of the amendments to AASB 1060
     BC11            The AASB For-Profit Entity Standard-Setting Framework and the AASB Not-For-Profit Entity Standard-Setting Framework outline the approach adopted by the Board for considering whether to add to or amend disclosure requirements in AASB 1060 when the IASB makes amendments to full IFRS Standards.
     BC12            The standard-setting frameworks first consider whether the amendments introduce a significant recognition and measurement difference between full IFRS Standards and the IFRS for SMEs Standard.  If they don't, the standard-setting frameworks state that no further action is required unless:
          (a)                    the disclosures address a matter of public policy;
          (b)                   the disclosures are of particular relevance in the Australian environment; or
          (c)                    the amendments clarify or reduce existing disclosure requirements in full IFRS Standards.
     BC13            In addition to the principles in the standard-setting frameworks, the Board acknowledged when finalising AASB 1060 that a review of the disclosures in AASB 1060 would need to take place any time the IFRS for SMEs Standard is updated (paragraph BC96).
     BC14            Although there will be no recognition and measurement differences between full IFRS Standards and the IFRS 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