Document ID: chunk:federal_register_of_legislation:F2023L00015:reg:21:p63
Version: federal_register_of_legislation:F2023L00015
Segment Type: reg
Provision Reference: reg 21 (pt 63/101)
Character Range: 205142–208111

the Medicare levy to probably be sufficiently like a tax to be regarded as not being a beneficiary pays model as intended under this indicator. Accordingly, the Boards considered whether it might also be helpful to explain that the significance of the indicator would be on a spectrum relating to the extent to which premiums or levies represented a beneficiary-pays model.

     BC196        The Boards observed that a payment/contribution to the insurer from a policyholder is not a part of the insurance contract definition in AASB 17/PBE IFRS 17. However, they noted that some type of funding from an arrangement participant is probably a reasonable indicator of the relevance of applying AASB 17/PBE IFRS 17 in the sense that it helps to establish an enforceable contract-like relationship between the entity providing the coverage and the arrangement participants.

     BC197        The Boards observed that the practice of refunding pro rata amounts of payments/contributions in the event that an arrangement participant cancels its coverage prior to the end of the coverage period would be further evidence of an enforceable contract-like relationship between the entity providing the coverage and an arrangement participant. The Boards noted that this is a widespread practice in the private sector general insurance industry.

Capitalising/recapitalising

     BC198        The Boards noted that some public sector entities might need funding sourced from general taxation from time to time to help capitalise or recapitalise a public sector arrangement. These might be regarded as equity injections in some cases, rather than a source of routine funding. Accordingly, the Boards observed that periodic injections of funding from general taxation to capitalise or recapitalise a public sector arrangement would not be in conflict with a self-funding or beneficiary-pays model of funding, for the purpose of determining whether an arrangement should be accounted for under AASB 17/PBE IFRS 17.

Administrative convenience

     BC199        The Boards noted that some public sector arrangements involve sourcing funds by way of levies on transactions between participants and private sector entities (which may be insurers). The Boards noted that, while there may not be a direct cash transaction between the public sector entity and participants in terms of the collection of funds, this is often due to the need for administrative convenience, which would not affect an assessment of the extent to which funds are sourced from participants.

Boards' proposal on the source and extent of funding as an indicator in AASB ED 319/NZASB ED 2022-3

     BC200        Based on the above considerations, the Boards decided to propose as an indicator of public sector arrangements to be accounted for as insurance contracts, the extent to which an arrangement participant is responsible for paying a contribution. This is on that basis that it provides evidence of a