FINANCIAL SERVICES Managed Investments Seminar May 2007
Managed Investments Seminar <ul><li>Introduction – Tony Mulveney, Partner </li></ul><ul><li>Tax Update – Saminda Fernando,...
Key tax developments Saminda Fernando
Key tax developments <ul><li>CGT and foreign residents </li></ul><ul><li>Withholding tax - Tax Laws Amendment (2007 Measur...
CGT and foreign residents <ul><li>Implications for non-resident investors: </li></ul><ul><ul><li>Disposal of interests in ...
CGT and foreign residents <ul><li>Disposal of interests in managed funds </li></ul><ul><ul><li>Non-portfolio interest test...
Distributions to non-residents from managed investment trusts <ul><li>Flat 30% non-final tax regardless of identity of non...
Distributions to non-residents from managed investment trusts (cont) <ul><li>Fund payment </li></ul><ul><ul><li>Estimation...
Distributions to non-residents from managed investment trusts (cont) <ul><li>Trustee required to withhold on Fund Payment ...
Distributions to non-resident trustees <ul><li>Distributions to non-resident trusts assessable to resident trustee </li></...
2007 Federal Budget Announcements
2007 Federal Budget Announcements <ul><li>SBT ceiling to be removed </li></ul><ul><ul><li>Effective 1 July 2005 </li></ul>...
Presenter’s contact details Saminda Fernando Senior Manager 02 9335 8809 [email_address] The information contained herein ...
Superannuation Wayne Hirt
Superannuation – Is it really Simplified? <ul><li>Topics </li></ul><ul><ul><li>‘ Simplification’ overview </li></ul></ul><...
Everything is rosy –  Overview of key changes
Budget overview <ul><li>Changes to the tax arrangements for superannuation termination payments </li></ul><ul><li>Reasonab...
But danger lurks beneath  (Implications)
Administration systems implications <ul><li>Administrative issues </li></ul><ul><ul><li>Update of fund documentation (Trus...
Pensions implications <ul><li>Allocated pensions </li></ul><ul><li>Morphing / Commutation to new pension </li></ul><ul><ul...
Allocated pension minimums compared to  new superannuation pension minimums
TFN implications <ul><li>TFN collection and taxation consequences (penalty tax) </li></ul><ul><li>Rejection of undeducted ...
Contribution implications <ul><li>Contribution limits </li></ul><ul><ul><li>Concessional </li></ul></ul><ul><ul><li>Non co...
Death Benefit implications <ul><li>Payment to a dependant </li></ul><ul><li>Payment to a non-dependant </li></ul><ul><li>P...
Just when you thought it was safe to go back into the water! <ul><li>AML / CTF </li></ul><ul><li>Superannuation Guarantee ...
Conclusion <ul><li>Is it really Simpler? </li></ul><ul><li>Have you identified the system / process enhancements required?...
Appendices
Tax rates for lump sums paid by  superannuation funds Nil 20% 5% assessable at MTR 20% Pre-83 Post-83 Under 55 Nil Nil 45%...
Tax rates for pensions paid by  superannuation funds New treatment Current treatment (assuming the individual has not exce...
Presenter’s contact details Wayne Hirt Partner 02 9335 7871 [email_address] The information contained herein is of a gener...
Unit Pricing Martin Paino
Agenda <ul><li>Unit Pricing Attribution (A new development) </li></ul><ul><ul><li>What is it? </li></ul></ul><ul><ul><li>W...
Actuarial Attribution of  Unit Prices
What is Actuarial Unit Pricing Attribution?  <ul><li>It is a more advanced form of the standard “unit price benchmarking” ...
What Factors impact a Unit Price?  Unit Price @ t (Australia Equities) Unit Price @ t+1 (Australia Equities) Asset Growth ...
Standard Benchmarking  Unit Price @ t (Australia Equities) Unit Price @ t+1 (Australia Equities) Asset Growth Tax Fees Bac...
Unit Pricing Attribution  Unit Price @ t (Australia Equities) Asset Growth Tax Fees Back Dating Transaction Spreads Liabil...
How do you do Unit Pricing Attribution?  Unit Price @ t (Australia Equities) Asset Growth Tax Fees Back Dating Transaction...
Practical Considerations  <ul><li>Must help resolve issues, not just identify issues  </li></ul><ul><li>Lots of data requi...
Summary  <ul><li>Unit Pricing attribution in a new tool that is likely to replace the standard benchmarking check used by ...
APRA’s Risk Management Standard for Life Insurers
Brief Overview  <ul><li>Major recent development for Life Insurers. APRA Standard are: </li></ul><ul><ul><li>LPS 220 Risk ...
Presenter’s contact details Martin Paino Senior Manager  KPMG Actuaries 02 9335 7914 [email_address] The information conta...
Financial reporting update David Kells
Financial reporting update <ul><li>AASB 7  Financial Instruments: Disclosures </li></ul><ul><li>AASB 8  Operating segments...
AASB 7  Financial Instruments: Disclosures <ul><li>Applicable to financial reporting periods beginning on or after 1 Janua...
AASB 7  Financial Instruments: Disclosures <ul><li>Key requirements: </li></ul><ul><ul><li>Existing AASB 132 requirements ...
AASB 7  Financial Instruments: Disclosures <ul><li>Practical implications </li></ul><ul><ul><li>Will impact schemes for pe...
AASB 8  Operating segments <ul><li>Applicable for periods beginning on or after 1 January 2009 with early adoption permitt...
Amendments to existing standards <ul><li>AASB 101  Presentation of Financial Statements </li></ul><ul><ul><li>Applicable f...
Amendments to existing standards <ul><li>AASB 2007-4  Amendments to Australian Accounting Standards arising from ED 151 an...
Future developments <ul><li>IASB has committed to no new standards to apply before 1 January 2009 with following exception...
Future developments <ul><li>Convergence with US GAAP is gathering momentum </li></ul><ul><li>Accounting for superannuation...
Future developments <ul><li>Classification of financial instruments puttable at fair value </li></ul><ul><ul><li>Final sta...
Presenter’s contact details Name David Kells Position Partner Phone 02 9455 9602 Email [email_address] The information con...
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FINANCIAL SERVICES Managed Investments Seminar

  1. 1. FINANCIAL SERVICES Managed Investments Seminar May 2007
  2. 2. Managed Investments Seminar <ul><li>Introduction – Tony Mulveney, Partner </li></ul><ul><li>Tax Update – Saminda Fernando, Senior Manager </li></ul><ul><li>Superannuation – Wayne Hirt, Partner </li></ul><ul><li>Unit Pricing – Martin Paino, Senior Manager </li></ul><ul><li>Financial Reporting & IFRS – David Kells, Partner </li></ul>
  3. 3. Key tax developments Saminda Fernando
  4. 4. Key tax developments <ul><li>CGT and foreign residents </li></ul><ul><li>Withholding tax - Tax Laws Amendment (2007 Measures No. 3) Bill 2007 </li></ul><ul><ul><li>Distributions to non-residents from managed investment trusts </li></ul></ul><ul><ul><li>Distributions to non-resident trustee beneficiaries </li></ul></ul>
  5. 5. CGT and foreign residents <ul><li>Implications for non-resident investors: </li></ul><ul><ul><li>Disposal of interests in managed funds </li></ul></ul><ul><ul><li>Capital gains through fixed trusts </li></ul></ul>
  6. 6. CGT and foreign residents <ul><li>Disposal of interests in managed funds </li></ul><ul><ul><li>Non-portfolio interest test </li></ul></ul><ul><ul><ul><li>Less than 10% at disposal or throughout a 12-month period in the 2 years before disposal </li></ul></ul></ul><ul><ul><li>Principal asset test </li></ul></ul><ul><ul><ul><li>More than 50% of the entity’s assets are TARP </li></ul></ul></ul><ul><ul><ul><li>Tracing through chains of entities </li></ul></ul></ul><ul><li>Capital gains through fixed trusts </li></ul>
  7. 7. Distributions to non-residents from managed investment trusts <ul><li>Flat 30% non-final tax regardless of identity of non-resident (from 1 July following Royal Assent) </li></ul><ul><li>Managed investment trust </li></ul><ul><ul><li>Relevant connection with Australia </li></ul></ul><ul><ul><li>MIS </li></ul></ul><ul><ul><li>Listed or widely held </li></ul></ul>
  8. 8. Distributions to non-residents from managed investment trusts (cont) <ul><li>Fund payment </li></ul><ul><ul><li>Estimation of net income adjusted for excluded amounts and deductions </li></ul></ul><ul><ul><li>Excluded amounts (interest, dividend, royalties, non-TAP capital gains and foreign income) </li></ul></ul><ul><ul><li>Reasonable estimations required based on trustee’s knowledge at the time of making the payment </li></ul></ul><ul><ul><li>Timing </li></ul></ul>
  9. 9. Distributions to non-residents from managed investment trusts (cont) <ul><li>Trustee required to withhold on Fund Payment </li></ul><ul><li>Remittance </li></ul><ul><li>No withholding for payments to Intermediaries </li></ul><ul><ul><li>Notices </li></ul></ul>
  10. 10. Distributions to non-resident trustees <ul><li>Distributions to non-resident trusts assessable to resident trustee </li></ul><ul><li>Tax rate is the non-resident individual top marginal tax rate (currently 45%) </li></ul><ul><li>Non-final tax </li></ul><ul><li>Generally effective 1 July 2006 </li></ul><ul><li>Carve outs: </li></ul><ul><ul><li>Australian managed investment trusts </li></ul></ul><ul><ul><li>Trustee intermediaries (managed investment trust income only) </li></ul></ul>
  11. 11. 2007 Federal Budget Announcements
  12. 12. 2007 Federal Budget Announcements <ul><li>SBT ceiling to be removed </li></ul><ul><ul><li>Effective 1 July 2005 </li></ul></ul><ul><li>Restructuring stapled entities </li></ul><ul><ul><li>Effective from 2006-07 year </li></ul></ul><ul><li>Venture capital - further concessions </li></ul>
  13. 13. Presenter’s contact details Saminda Fernando Senior Manager 02 9335 8809 [email_address] The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
  14. 14. Superannuation Wayne Hirt
  15. 15. Superannuation – Is it really Simplified? <ul><li>Topics </li></ul><ul><ul><li>‘ Simplification’ overview </li></ul></ul><ul><ul><li>Implications </li></ul></ul><ul><ul><ul><li>Administration systems </li></ul></ul></ul><ul><ul><ul><li>Pensions </li></ul></ul></ul><ul><ul><ul><li>TFNs </li></ul></ul></ul><ul><ul><ul><li>Contributions </li></ul></ul></ul><ul><ul><ul><li>Taxation on death benefits </li></ul></ul></ul><ul><ul><li>Superannuation Guarantee (SG) / Ordinary Time Earnings (OTE) </li></ul></ul><ul><ul><li>Anti Money Laundering (AML) / Counter Terrorism Financing (CTF) </li></ul></ul>
  16. 16. Everything is rosy – Overview of key changes
  17. 17. Budget overview <ul><li>Changes to the tax arrangements for superannuation termination payments </li></ul><ul><li>Reasonable Benefit Limits (RBLs) will be abolished </li></ul><ul><li>Tax on benefit payments </li></ul><ul><ul><li>Lump sum </li></ul></ul><ul><ul><li>Pension </li></ul></ul><ul><ul><li>Death </li></ul></ul><ul><li>Removal of the current age-based deductible contribution limits </li></ul><ul><li>New pension structure </li></ul>
  18. 18. But danger lurks beneath (Implications)
  19. 19. Administration systems implications <ul><li>Administrative issues </li></ul><ul><ul><li>Update of fund documentation (Trust Deed, PDS, etc) </li></ul></ul><ul><ul><li>Contributions reporting – Surcharge reincarnate </li></ul></ul><ul><ul><li>Treatment of excess contributions </li></ul></ul><ul><ul><li>Refund of contributions </li></ul></ul><ul><ul><ul><li>No TFNs </li></ul></ul></ul><ul><ul><ul><li>Excessive amounts </li></ul></ul></ul><ul><ul><li>Crystallisation of pre July ’83 components </li></ul></ul><ul><li>External software providers </li></ul><ul><li>System upgrade </li></ul>
  20. 20. Pensions implications <ul><li>Allocated pensions </li></ul><ul><li>Morphing / Commutation to new pension </li></ul><ul><ul><li>Trigger events </li></ul></ul><ul><li>New superannuation minimums </li></ul><ul><li>Transition to retirement pensions </li></ul>
  21. 21. Allocated pension minimums compared to new superannuation pension minimums
  22. 22. TFN implications <ul><li>TFN collection and taxation consequences (penalty tax) </li></ul><ul><li>Rejection of undeducted monies </li></ul><ul><li>Risk only products </li></ul><ul><li>TFN quoted post payment </li></ul><ul><li>Quotation of TFNs by employers </li></ul><ul><li>What are you ding to collect TFN’s? </li></ul>
  23. 23. Contribution implications <ul><li>Contribution limits </li></ul><ul><ul><li>Concessional </li></ul></ul><ul><ul><li>Non concessional </li></ul></ul><ul><li>Monitoring of contributions against limits </li></ul><ul><ul><li>Who is responsible… </li></ul></ul><ul><ul><ul><li>Member? </li></ul></ul></ul><ul><ul><ul><li>Fund? </li></ul></ul></ul><ul><ul><ul><li>Employer? </li></ul></ul></ul><ul><li>Reporting requirements </li></ul><ul><li>Salary packaging </li></ul><ul><li>DB funds </li></ul><ul><li>Early / Late balancers </li></ul>
  24. 24. Death Benefit implications <ul><li>Payment to a dependant </li></ul><ul><li>Payment to a non-dependant </li></ul><ul><li>Payment to an estate </li></ul>
  25. 25. Just when you thought it was safe to go back into the water! <ul><li>AML / CTF </li></ul><ul><li>Superannuation Guarantee / OTE </li></ul>
  26. 26. Conclusion <ul><li>Is it really Simpler? </li></ul><ul><li>Have you identified the system / process enhancements required? </li></ul><ul><li>Resourcing – I.T. and Human </li></ul>
  27. 27. Appendices
  28. 28. Tax rates for lump sums paid by superannuation funds Nil 20% 5% assessable at MTR 20% Pre-83 Post-83 Under 55 Nil Nil 45% 38% Pre-83 Post-83 Excess above RBLs Nil As per 55 to 59 above 60+ Nil Nil on 1 st $140,000; balance at 15% 5% assessable at MTR Nil on 1 st $135,590; balance at 15% Pre-83 Post-83 55 to 59 New treatment Current treatment Age
  29. 29. Tax rates for pensions paid by superannuation funds New treatment Current treatment (assuming the individual has not exceeded their relevant RBL) Age Nil As for age 55 to 59 60+ Nil MTR less 15% rebate Nil MTR less 15% rebate Deductible or tax exempt amount Balance 55 to 59
  30. 30. Presenter’s contact details Wayne Hirt Partner 02 9335 7871 [email_address] The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
  31. 31. Unit Pricing Martin Paino
  32. 32. Agenda <ul><li>Unit Pricing Attribution (A new development) </li></ul><ul><ul><li>What is it? </li></ul></ul><ul><ul><li>What are the benefits (for unit pricing controls and processes)? </li></ul></ul><ul><ul><li>Practical Issues to be aware of. </li></ul></ul><ul><li>APRA’s Risk Management Standards for Life Insurers </li></ul>
  33. 33. Actuarial Attribution of Unit Prices
  34. 34. What is Actuarial Unit Pricing Attribution? <ul><li>It is a more advanced form of the standard “unit price benchmarking” control that: </li></ul><ul><ul><li>compares the movement in unit price against the movement in a benchmark (e.g. ASX 200 Index) </li></ul></ul><ul><li>Who is doing it? We know of 2 large fund managers </li></ul><ul><li>Why are they doing it? </li></ul><ul><ul><li>Better understand why unit price moves differently to assets </li></ul></ul><ul><ul><li>To help with communicating with investors (esp. external options) </li></ul></ul><ul><ul><li>Identify problems that can not be detected under standard approach </li></ul></ul><ul><ul><li>Identify small errors that accumulate over time </li></ul></ul><ul><li>The market is heading in this direction (i.e. more robust controls) </li></ul>
  35. 35. What Factors impact a Unit Price? Unit Price @ t (Australia Equities) Unit Price @ t+1 (Australia Equities) Asset Growth Tax Fees Back Dating Transaction Spreads Liability Effects Delays in investing Money
  36. 36. Standard Benchmarking Unit Price @ t (Australia Equities) Unit Price @ t+1 (Australia Equities) Asset Growth Tax Fees Back Dating Transaction Spreads Liability Effects Delays in investing Money Unit Price @ t (Australia Equities) Benchmark Return net of Tax and Fee (S&P/ASX 200 Index) Residual Check within Tolerance
  37. 37. Unit Pricing Attribution Unit Price @ t (Australia Equities) Asset Growth Tax Fees Back Dating Transaction Spreads Liability Effects Delays in investing Money Unit Price @ t (Australia Equities) Residual Residual Residual Residual Residual Residual Residual Expected Tax Expected Fees Zero Zero Small Small Check within Tolerance Benchmark Gross of Tax (S&P/ASX 200) Check within Tolerance
  38. 38. How do you do Unit Pricing Attribution? Unit Price @ t (Australia Equities) Asset Growth Tax Fees Back Dating Transaction Spreads Liability Effects Delays in investing Money 1. Attribute Investment Return into 7 categories on the left (minimum). (Using the unit pricing formula and attribution techniques commonly used by actuaries in life insurance and by finance specialists to attribute investment returns) 2. Calculate the expected impact of each category on unit price (Using knowledge of unit pricing process, products, and unit pricing formula) 3. Compare the difference between 1 and 2 for each category against tolerance level (Set tolerances based judgement and historical experience of funds) 4. Aggregate daily attribution effects (Using techniques commonly used to aggregate daily investment attribution effects
  39. 39. Practical Considerations <ul><li>Must help resolve issues, not just identify issues </li></ul><ul><li>Lots of data required. Need detailed transaction data (units and cash flows) </li></ul><ul><li>Process must be automated (computations can be significant) </li></ul><ul><li>Should be tested in spreadsheets before being implemented (each fund manager’s solution will be slightly different) </li></ul><ul><li>Must select aggregating technique (no correct approach, each has advantages and disadvantages) </li></ul><ul><li>Frequency of doing aggregation calculation (resources vs benefits) </li></ul><ul><li>Areas to be aware of: </li></ul><ul><ul><li>Transaction Spreads </li></ul></ul><ul><ul><li>Back dating </li></ul></ul>
  40. 40. Summary <ul><li>Unit Pricing attribution in a new tool that is likely to replace the standard benchmarking check used by managers </li></ul><ul><li>Advantages are: </li></ul><ul><ul><li>Help identify small errors in unit price </li></ul></ul><ul><ul><li>Better understand (short term and long term) performance of fund against benchmark </li></ul></ul><ul><ul><li>Help with communicating with investors </li></ul></ul><ul><ul><li>Help with improving unit pricing processes </li></ul></ul><ul><ul><li>Identify errors that accumulate over time </li></ul></ul><ul><ul><li>Help ensure investors are treated equitably </li></ul></ul>
  41. 41. APRA’s Risk Management Standard for Life Insurers
  42. 42. Brief Overview <ul><li>Major recent development for Life Insurers. APRA Standard are: </li></ul><ul><ul><li>LPS 220 Risk Management; and </li></ul></ul><ul><ul><li>LPS 232 Business Continuity Management </li></ul></ul><ul><li>Applies in full from 1 January 2008 </li></ul><ul><li>Standards are similar to those applying to General Insurers and Super Funds (Managed Investment Schemes next??) </li></ul><ul><li>Life Insurers are well placed, but need to pull together documents </li></ul><ul><li>Our experience is that: </li></ul><ul><ul><li>Operational Risk (well documented) </li></ul></ul><ul><ul><li>Asset liability management (needs some work) </li></ul></ul><ul><ul><li>Capital management / Enterprise Capital (over arching philosophy required) </li></ul></ul><ul><li>For more information KPMG Actuaries has a 4 page fact sheet </li></ul>
  43. 43. Presenter’s contact details Martin Paino Senior Manager KPMG Actuaries 02 9335 7914 [email_address] The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. © 2006 KPMG, an Australian partnership, is part of the KPMG International network. KPMG International is a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG. Liability limited by a scheme approved under Professional Standards Legislation.
  44. 44. Financial reporting update David Kells
  45. 45. Financial reporting update <ul><li>AASB 7 Financial Instruments: Disclosures </li></ul><ul><li>AASB 8 Operating segments </li></ul><ul><li>Amendments to existing standards </li></ul><ul><li>Future developments </li></ul><ul><li>KPMG’s Example Managed Investment Scheme </li></ul>
  46. 46. AASB 7 Financial Instruments: Disclosures <ul><li>Applicable to financial reporting periods beginning on or after 1 January 2007 with early adoption permitted. </li></ul><ul><li>Replaces the disclosure requirements of AASB 132 Financial Instruments: Presentation and Disclosure </li></ul>
  47. 47. AASB 7 Financial Instruments: Disclosures <ul><li>Key requirements: </li></ul><ul><ul><li>Existing AASB 132 requirements plus: </li></ul></ul><ul><ul><li>Sensitivity analysis </li></ul></ul><ul><ul><li>Concentrations of risk </li></ul></ul><ul><ul><li>Quantification of sensitivity to ‘reasonably possible’ variances in credit, liquidity and market risk </li></ul></ul><ul><ul><li>Details of impaired or past due assets </li></ul></ul><ul><ul><li>Example disclosures provided in Appendix 2 of KPMG’s Example Managed Investment Scheme </li></ul></ul>
  48. 48. AASB 7 Financial Instruments: Disclosures <ul><li>Practical implications </li></ul><ul><ul><li>Will impact schemes for periods commencing on or after 1 January 2007 and preparing accounts for period from inception to 30 June 2006 </li></ul></ul><ul><ul><li>Impacts all financial instruments, including cash, investments, trade payables and receivables, borrowings and derivatives </li></ul></ul><ul><ul><li>30 June 2007 comparatives will be required for 2008 accounts </li></ul></ul><ul><ul><li>Disclosures may require data which is not currently available from accounting systems </li></ul></ul>
  49. 49. AASB 8 Operating segments <ul><li>Applicable for periods beginning on or after 1 January 2009 with early adoption permitted </li></ul><ul><li>Requires segment reporting based on segments monitored by the chief operating decision maker </li></ul><ul><li>AASB 8 only applies to individual and consolidated financial statements of entities whose debt or equity instruments are traded in a public market or are in the process of issuing any class of instruments in public markets </li></ul><ul><li>If not meeting the criteria above, adoption of AASB 8 will result in removal of the segment note but…... </li></ul><ul><li>“ Public market” is not defined and interpretation may change (especially due to AASB’s SME project) </li></ul>
  50. 50. Amendments to existing standards <ul><li>AASB 101 Presentation of Financial Statements </li></ul><ul><ul><li>Applicable for years beginning on or after 1 January 2007 </li></ul></ul><ul><ul><li>Amended to remove some (but not all) Australian specific additional disclosure </li></ul></ul><ul><ul><li>Replaces Australian specific guidance with IASB implementation guidance </li></ul></ul><ul><ul><li>Retention of some Australian specific amendments applying to for-profit entities, including statement re compliance with Australian Accounting Standards, auditor remuneration and franking account disclosures </li></ul></ul><ul><ul><li>If not early adopted, need to include a statement in 30 June 2007 financials re potential impacts </li></ul></ul><ul><ul><li>Minimal impact for schemes </li></ul></ul>
  51. 51. Amendments to existing standards <ul><li>AASB 2007-4 Amendments to Australian Accounting Standards arising from ED 151 and Other Amendments </li></ul><ul><ul><li>Applies to periods commencing on or after 1 July 2007 with early adoption allowed. </li></ul></ul><ul><ul><li>Principally driven by changes in consolidation requirements for reporting entities </li></ul></ul><ul><ul><li>Reinstates optional treatments allowed under IFRS but previously excluded from AIFRS, including allowing cash flow statements to be prepared using either the direct or indirect method. </li></ul></ul><ul><ul><li>Removes some minor Australian specific disclosures. </li></ul></ul><ul><ul><li>Must justify why a new accounting policy is more appropriate </li></ul></ul><ul><ul><li>Need to include a statement re potential impacts if not early adopted </li></ul></ul><ul><ul><li>Minimal impact for schemes - disclosure only </li></ul></ul>
  52. 52. Future developments <ul><li>IASB has committed to no new standards to apply before 1 January 2009 with following exceptions: </li></ul><ul><ul><li>AASB 7 </li></ul></ul><ul><ul><li>IASB annual improvements program </li></ul></ul><ul><ul><li>IFRIC will continue to issue interpretations </li></ul></ul><ul><ul><li>AASB removal of some further Australian specific items from AIFRS </li></ul></ul>
  53. 53. Future developments <ul><li>Convergence with US GAAP is gathering momentum </li></ul><ul><li>Accounting for superannuation funds (AASB project) </li></ul><ul><ul><li>AASB released project summary in July 2006 </li></ul></ul><ul><ul><li>An issues paper and draft consultation paper is expected in Q2 2007. Main implications </li></ul></ul><ul><ul><ul><li>consolidation requirements for parent entity super funds </li></ul></ul></ul><ul><ul><ul><li>Application of AASB 119 Employee Benefits to super fund defined benefit obligations </li></ul></ul></ul><ul><ul><li>An exposure draft is expected in Q3 2007 </li></ul></ul>
  54. 54. Future developments <ul><li>Classification of financial instruments puttable at fair value </li></ul><ul><ul><li>Final standard is expected in Q3 2007 (likely to apply from 1 January 2009) </li></ul></ul><ul><ul><li>Exposure draft issued in June 2006 proposed: (a) financial instruments puttable at fair value; and (b) instruments that impose an obligation to deliver a pro-rata share of the net assets of an entity upon its liquidation to be classified as equity, subject to meeting certain criteria </li></ul></ul>
  55. 55. Presenter’s contact details Name David Kells Position Partner Phone 02 9455 9602 Email [email_address] The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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