Simplified Disclosure introduced about International Tax Reform – Pillar Two Model Rules

On 25 September 2023, the Australian Accounting Standards Board published amendments to AASB 1060 General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities that introduce new Simplified Disclosures about International Tax Reform (the Pillar Two Model Rules) for Tier 2 entities. The new disclosures are contained in AASB 2023-4 Amendments to Australian Accounting Standards – International Tax Reform – Pillar Two Model Rules: Tier 2 Disclosures.

Why amend AASB 1060?

AASB 2023-2 Amendments to Australian Accounting Standards – International Tax Reform – Pillar Two Model Rules (issued June 2023) clarifies how entities potentially subject to the OECD’s Pillar Two ‘top-up’ income taxes will account for and disclose their deferred taxes:

1. Entities will not be permitted to recognise or disclose information about deferred tax assets and deferred tax liabilities related to Pillar Two income taxes (this is a mandatory exception). Entities must then disclose that they have applied the mandatory exception.
2. Entities must disclose the amount of current income tax expense/income related to Pillar Two income taxes separately.
3. In periods when the Pillar Two income tax legislation is enacted or substantively enacted, but not yet in effect, entities must disclose known or reasonably estimable information that helps users of financial statements understand the entity’s exposure to Pillar Two income taxes arising from that legislation.

The AASB 2023-4 amendments require the disclosures noted in a. and b. above, but not c. for Tier 2 entities.

Effective date

The new disclosures apply to annual periods beginning on or after 1 January 2023, but which end on or after 30 September 2023. They can be adopted early for periods ending before 30 September 2023, including the 2022/2023 financial year.

More information

Please refer to our article for more information about the Pillar Two Tax reforms and accounting implications.

Need help?

Please contact our Corporate & International Tax team if you require assistance implementing the Pillar Two rules, or our IFRS & Corporate Reporting team for the financial reporting implications of the new rules.