Document ID: chunk:federal_register_of_legislation:F2023L01301:body:0:p7
Version: federal_register_of_legislation:F2023L01301
Segment Type: other
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Character Range: 17767–20761

enacted or substantively enacted Pillar Two legislation; and
          (b)                   requiring a Tier 2 entity to disclose its current tax expense (income) related to Pillar Two income taxes when relevant legislation is in effect would help users of the financial statements understand the magnitude of Pillar Two income taxes relative to the entity's overall tax expense (income).  The Board considered this disclosure would not be costly to prepare because a Tier 2 entity would already be required in these circumstances to recognise current tax related to Pillar Two income taxes.

Finalisation of ED 325 proposals
     BC20            Following the consultation period, and after considering the comments received, the Board decided to proceed with issuing this Standard, with minimal changes from the proposals in ED 325.

     Feedback from respondents on ED 325
     BC21            The Board received two formal comment letters on ED 325.  The feedback received indicated that, in general, both stakeholders were supportive of the proposals.  However, one stakeholder provided additional feedback.
     BC22            The stakeholder suggested that the proposed clarification to paragraph 176 was not necessary because it is already understood that the "transactions and other events" referred to in paragraph 176 include the enactment or substantive enactment of tax rates and laws.  They also suggested that if the Board is concerned that this may not be the case, the clarification should be worded more broadly than specifically referring to Pillar Two legislation, or else the Board could consider clarifying this in the Basis for Conclusions.
     BC23            The Board considered this feedback, along with feedback received by the IASB on IASB/ED/2023/3 and decided to generalise the wording of the clarification to paragraph 176 and refer to the Pillar Two legislation as an example.

Effective date
     BC24            The Board decided that the amendments should be made effective for annual periods beginning on or after 1 January 2023 that end on or after 30 September 2023, with earlier application permitted, as proposed in ED 325.  This is consistent with the effective date of AASB 2023-2 for most entities.
     BC25            The Board noted the comment from one of the respondents to ED 325 that the proposed effective date could make Tier 2 entities unsure about the application of the amendments to certain periods, such as the 2022/23 financial year.  The Board confirmed the proposed two-pronged effective date, which is required in this case to avoid any mandatory retrospective application to reporting periods that have ended prior to the Board making the Standard.  The Board noted that an entity could elect to apply the amendments before their mandatory application date, for example to the 2022/23 financial year or any period ending before 30 September 2023.
[1]  AASB 1053 Application of Tiers of Australian Accounting Standards outlines