Page 1 of 2Our Ref.: C/FRSCSent electronically through the IASB Website (www.ifrs.org)
14 November 2019Mr Hans HoogervorstInternational Accounting Standards BoardColumbus Building7 Westferry CircusCanary WharfLondon E14 4HDUnited KingdomDear Hans,IASB Exposure Draft ED/2019/05 Deferred Tax related to Assets and Liabilitiesarising from a Single Transaction (Proposed amendments to IAS 12)
The Hong Kong Institute of Certified Public Accountants (HKICPA) is the only bodyauthorised by law to set and promulgate standards relating to financial reporting, auditing,and ethics for professional accountants, in Hong Kong. We are grateful for the opportunityto provide you with our comments on this Exposure Draft (ED).The HKICPA supports the proposed amendments in clarifying the diversity in practicecaused by differing views on whether a company is required to apply the recognitionexemption when it accounts for leases.However, to help understand, we consider the IASB should supplement the proposedamendments to IAS 12 with examples/guidance to illustrate:
•application of the main requirements, for example similar to those in the Appendix ofthe IASB’s educational material In brief: Deferred Tax related to Assets and Liabilitiesarising from a Single Transaction; and•accounting for deferred tax if a lease modification takes place (including adding orterminating the right to use one or more underlying assets, and extending or shorteningthe contractual lease term).We also suggest the IASB explains how the proposed amendments, would apply to leaseswhen an entity applied the cumulative catch-up approach on transition to IFRS 16. An entitymight have recognised either equal or unequal assets and liabilities for leases at the dateof initial application (1 January 2019), by applying paragraph C8 of IFRS 16 (in the casewhere the entity would have recognised an equal asset and liability at the commencementdate of the lease had it applied IFRS 16 retrospectively).In addition, the existing wordings in paragraph BC18 of the ED (advance lease paymentsand payments of initial direct costs) are unclear and we suggest the IASB should add furtherelaboration in the final basis for conclusions for better understanding. For example, specifywhich existing requirements in IAS 12 apply to any taxable differences arising from suchpayments and in particular whether the initial recognition exemption would apply.Page 2 of 2Work undertaken by HKICPA in forming its views:
The HKICPA:
(a) issued an Invitation to Comment on the ED on 25 July 2019 to our stakeholders;
(b) sought input from its Taxation Advisory Panel comprising technical and industryexperts and auditors from accounting firms; and(c) developed its views through its Financial Reporting Standards Committee, havingreflected on its stakeholder feedback. The Committee comprises of academics,preparer representatives from various industry sectors, investors, regulators, andtechnical and industry experts from small, medium and large accounting firms.If you have any questions regarding the matters raised in this letter, please contact me orAnthonyWong,AssociateDirectorintheStandardSettingDepartment(anthonylwwong@hkicpa.org.hk).Yours sincerely,Christina NgDirector, Standard Setting
IASB Exposure Draft ED/2019/05 Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Proposed amendments to IAS 12)
下载原件Page 1 of 2Our Ref.: C/FRSCSent electronically through the IASB Website (www.ifrs.org)
14 November 2019Mr Hans HoogervorstInternational Accounting Standards BoardColumbus Building7 Westferry CircusCanary WharfLondon E14 4HDUnited KingdomDear Hans,IASB Exposure Draft ED/2019/05 Deferred Tax related to Assets and Liabilitiesarising from a Single Transaction (Proposed amendments to IAS 12)
The Hong Kong Institute of Certified Public Accountants (HKICPA) is the only bodyauthorised by law to set and promulgate standards relating to financial reporting, auditing,and ethics for professional accountants, in Hong Kong. We are grateful for the opportunityto provide you with our comments on this Exposure Draft (ED).The HKICPA supports the proposed amendments in clarifying the diversity in practicecaused by differing views on whether a company is required to apply the recognitionexemption when it accounts for leases.However, to help understand, we consider the IASB should supplement the proposedamendments to IAS 12 with examples/guidance to illustrate:
•application of the main requirements, for example similar to those in the Appendix ofthe IASB’s educational material In brief: Deferred Tax related to Assets and Liabilitiesarising from a Single Transaction; and•accounting for deferred tax if a lease modification takes place (including adding orterminating the right to use one or more underlying assets, and extending or shorteningthe contractual lease term).We also suggest the IASB explains how the proposed amendments, would apply to leaseswhen an entity applied the cumulative catch-up approach on transition to IFRS 16. An entitymight have recognised either equal or unequal assets and liabilities for leases at the dateof initial application (1 January 2019), by applying paragraph C8 of IFRS 16 (in the casewhere the entity would have recognised an equal asset and liability at the commencementdate of the lease had it applied IFRS 16 retrospectively).In addition, the existing wordings in paragraph BC18 of the ED (advance lease paymentsand payments of initial direct costs) are unclear and we suggest the IASB should add furtherelaboration in the final basis for conclusions for better understanding. For example, specifywhich existing requirements in IAS 12 apply to any taxable differences arising from suchpayments and in particular whether the initial recognition exemption would apply.Page 2 of 2Work undertaken by HKICPA in forming its views:
The HKICPA:
(a) issued an Invitation to Comment on the ED on 25 July 2019 to our stakeholders;
(b) sought input from its Taxation Advisory Panel comprising technical and industryexperts and auditors from accounting firms; and(c) developed its views through its Financial Reporting Standards Committee, havingreflected on its stakeholder feedback. The Committee comprises of academics,preparer representatives from various industry sectors, investors, regulators, andtechnical and industry experts from small, medium and large accounting firms.If you have any questions regarding the matters raised in this letter, please contact me orAnthonyWong,AssociateDirectorintheStandardSettingDepartment(anthonylwwong@hkicpa.org.hk).Yours sincerely,Christina NgDirector, Standard Setting