Document ID: chunk:federal_register_of_legislation:F2023C00402:reg:97:p34
Version: federal_register_of_legislation:F2023C00402
Segment Type: reg
Provision Reference: reg 97 (pt 34/56)
Character Range: 352952–355854

an element that is a tax component as it is not refundable. In that instance the licensor should apply the guidance in paragraphs F28–F32 to disaggregate the transaction price and account for the component that relates to the transfer of a licence in accordance with AASB 15 (and any additional guidance contained in this Standard). The remainder of the transaction price, being the non-refundable component, is accounted for in accordance with AASB 1058.

     BC59            The Board considered whether variable consideration should be considered as a circumstance rebutting the presumption that the transaction price should not be allocated.  The Board noted that AASB 15 provides specific guidance for variable consideration for IP licences and accordingly considered there to be no difference in economic substance between a public sector entity or private sector entity undertaking such arrangement as part of a licence arrangement that would warrant a different accounting treatment. Therefore, a licence fee that includes variable consideration is part of revenue earned from issuing the licence and not a tax.

     BC60            Respondents to ED 283 agreed with the Board's proposal to utilise the rebuttable presumption in Appendix F of AASB 15, however some raised concerns that the proposals did not always allow for the allocation between a licence and a tax where there is variable consideration. The Board was made aware of two scenarios where respondents believed that the variable component was not a sales-based or usage-based royalty, but instead a tax that should be eligible for disaggregation:

          (a)                    the variable amount is levied on the licensee under a separate agreement that is signed concurrently with the licencing agreement and hence is labelled as a separate tax, rather than variable consideration for the licencing arrangement. In the example provided, the rate at which the licensee is 'taxed' is agreed between the licensor and licensee and is negotiated on a licence-by-licence basis, rather than being imposed as a state-wide or national taxation regime (ie it is an individually negotiated rate rather than a single rate applied to all parties entering into such arrangements within a certain jurisdiction); and

          (b)                   the variable fee for the licence is a generic tax charged to any entity undertaking similar activities, regardless of whether that entity holds a licence or not. In the example given, the licensee was required to pay a specified fee (eg 10 per cent) on the proceeds from its betting activities that it was licensed to conduct in its gaming venue. However, this same 10 per cent fee was also payable as a tax for entities that undertook equivalent betting activities for which it was unnecessary for the entity to be licensed (for example, an online betting agency that does not require a