As part of the financial requirements of their licence, some AFS licensees have a ‘net tangible asset’ (NTA) condition which means that intangible assets do not count towards NTA. With IFRS 16 Leases requiring most leased assets to be capitalised on the balance sheet as a right-of-use (ROU) asset, together with the associated lease liability, some AFS licensees could have difficulty meeting NTA requirements because of ASIC’s view outlined in Media Release MR 19-341 that ROU assets are counted as intangible assets. This problem was partially resolved by ASIC’s ‘no action position’ (noted in July 2020 Accounting News) whereby ASIC would allow ROU assets to be counted towards a licensees financial resource requirements.
Interested parties should note that the deadline for comments is 26 February 2021. Please refer to Consultation Paper 336 Financial Requirements: Treatment of leased assets for more information.