Imputation Credits ( AASB 1054 March 2020 )

term ‘imputation credits’ is used in paragraphs 13-15 to also mean ‘franking credits’. The disclosures required by paragraphs 13 and 15 shall be made separately in respect of any New Zealand imputation credits and any Australian imputation credits.

entity shall disclose the amount of imputation credits available for use in subsequent reporting periods.

the purposes of determining the amount required to be disclosed in accordance with paragraph 13, entities may have:

credits that will arise from the payment of the amount of the provision for income tax;

debits that will arise from the payment of dividends recognised as a liability at the reporting date; and

credits that will arise from the receipt of dividends recognised as receivables at the reporting date.

there are different classes of investors with different entitlements to imputation credits, disclosures shall be made about the nature of those entitlements for each class where this is relevant to an understanding of them.

The AASB and the FRSB have relocated the imputation credit disclosure requirements contained in AASB 101 and NZ IAS 12 Income Taxes to their respective separate disclosure Standards and to harmonise the disclosure requirements across both jurisdictions.

The AASB and the FRSB noted that Australia and New Zealand are among a limited number of jurisdictions that have an imputation tax regime and acknowledge the decision usefulness of information about imputation credits to users of financial information. Accordingly, the AASB and the FRSB decided that these disclosure requirements should be retained.

Given that both jurisdictions have disclosure requirements about imputation credits, and that the imputation regimes in each jurisdiction are highly similar, the Boards have harmonised the wording across both jurisdictions. The Boards also took the opportunity to simplify the disclosure requirements on the basis that in recent times both preparers and users have indicated that disclosures in financial statements have become overly complex.