Financial arrangements – IFRS financial reporting method

Clauses 121 and 146

Submissions

(Corporate Taxpayers Group)

An amendment to section EW 15D of the Income Tax Act is proposed which would require amounts associated with a financial arrangement that are taken directly to equity for financial reporting purposes to be recognised as taxable income.  A catch-up will be required in respect of past income years.

The Group wishes to raise a point of clarification in respect of this amendment.  The question is whether there is supposed to be a distinction drawn between “equity reserves” and “equity or other comprehensive income” as proposed to be used in sections EW 15D and EW 15G respectively.

Comment

Officials agree that clarification is required and have proposed amendments accordingly.

Recommendation

That the submission be accepted.