Document ID: chunk:federal_register_of_legislation:F2023C00402:reg:97:p27
Version: federal_register_of_legislation:F2023C00402
Segment Type: reg
Provision Reference: reg 97 (pt 27/56)
Character Range: 334096–337178

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               (ii)                   the discretionary nature of licences indicates that the economic purpose of the transaction is to obtain the goods and services (most commonly a right to perform) from the licensor, and therefore it would be counter intuitive to the Board's policy of transaction neutrality to preclude a NFP public sector licensor from accounting for its revenue when (or as) it transfers control of the good or service, consistent with for-profit entities providing goods or services.

Other resources
     BC26            The Board noted, based on common law and other commonly accepted definitions of the term 'licence', the following features are also useful in distinguishing licences from taxes:

          (a)                    whether the arrangement creates direct rights of a payer to use (not within the scope of AASB 16) or access the payee's asset, or perform an activity, and, depending on the type of arrangement, direct obligations of a payee. The Board noted that licences would generally confer direct rights to a licensee, and could, in some instances, create direct obligations for a licensor. The Board considered whether a tax could confer rights (and create obligations), but concluded that the nexus between any right or obligation as a result of a tax and the tax itself would not be sufficiently direct;

          (b)                   based on common law principles, the Board observed that licence arrangements confer a specific permission to perform an activity or to use or access an asset that would otherwise be unlawful; and

          (c)                    also based on common law principles, the Board observed that licences do not transfer control of a payee's underlying asset. The transfer of control of assets would fall within the scope of other Australian Accounting Standards (eg AASB 116 Property, Plant and Equipment and AASB 138), and therefore would not be within the scope of AASB 15.

     BC27            The Board considered the following common characteristics of licence arrangements irrelevant in distinguishing between licences and taxes, but noted they could be useful in determining the accounting treatment of revenue from licences:

          (a)                    the existence of an underlying asset;

          (b)                   refundability;

          (c)                    transferability; and

          (d)                   the term of the arrangement.

Terminology
     BC28            In considering the features that would be helpful in distinguishing a licence from a tax, the Board noted the substance of some arrangements might be contradictory to the term used to describe them. For example, an arrangement that is referred to as a 'tax' might in fact be a licence in substance, based on the Board's guidance. Alternatively, an arrangement might not be referred to as either a licence or a tax, but instead, for example, as a 'permit'. The Board noted that, notwithstanding the term used to describe an arrangement, a licensor should consider its substance in accordance