AASB proposes to align the Tier 2 financial statements presentation with AASB 18

On 25 June 2026, the Australian Accounting Standards Board (AASB) released Exposure Draft ED 341 Updating AASB 1060 to Align the Classification and Presentation Requirements with AASB 18.

The proposals represent the next significant step in the evolution of Tier 2 financial reporting and are designed to ensure that entities applying AASB 1060 General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities present their primary financial statements in substantially the same way as Tier 1 entities applying AASB 18 Presentation and Disclosure in Financial Statements.

It should be noted that ED 341 does not include:

  • The AASB’s proposals in ED 338 Application of AASB 18 and AASB 107 by Superannuation and Not-for-Profit Entities and Operating Cash Flow Reconciliation to remove requirements or provide choices to Tier 1 superannuation and not-for-profit public sector entities applying AASB 18 Presentation and Disclosure in Financial Statements (this is because they are not yet final)
  • Proposals for new AASB 18 disclosures to be included in AASB 1060 as these will be considered separately when the AASB reviews other changes as a result of the release of the third edition of IFRS for SMEs, and
  • The possible adoption of IFRS 19 Subsidiaries without Public Accountability: Disclosures in Australia.

Why is the AASB proposing these changes?

AASB 18 applies to Tier 1 entities for annual periods beginning on or after 1 January 2027 (1 January 2028 for not-for-profit entities and superannuation entities). It introduces new presentation and disclosure requirements for the primary financial statements for Tier 1 entities, the most far-reaching being the requirement to classify income and expenses in the statement of profit or loss into one of five categories. This means that the statement of profit or loss prepared under AASB 18 could look substantially different to that prepared under AASB 101 Presentation of Financial Statements.

During the AASB's post-implementation review (PIR) of Tier 2 reporting requirements, stakeholders strongly supported maintaining consistency between Tier 1 and Tier 2 presentation requirements in the primary financial statements. For example, a statement of profit or loss prepared for a Tier 1 parent should look essentially the same as that of its Tier 2 subsidiary.

The AASB therefore elected to fast-track amendments to AASB 1060 in that regard so that Tier 2 entities can apply the same classification and presentation principles as Tier 1 entities.

Retaining AASB 1060 as a ‘one-stop shop’

With regard to the AASB’s approach to incorporating AASB 18 requirements for Tier 2 entities, stakeholders preferred retaining a standalone standard. In other words, the AASB 18 classification and presentation requirements should be incorporated into AASB 1060, rather than having a cross-reference to AASB 18. While this will increase the overall length of AASB 1060, it will ensure that AASB 1060 remains a ‘one-stop shop’ for the presentation and disclosure requirements for Tier 2 entities.

How will the AASB 18 requirements be incorporated into AASB 1060?

The AASB 18 classification and presentation requirements are proposed to be incorporated into AASB 1060 as follows:

  • All the AASB 101 presentation paragraphs will be deleted
  • The requirements from the body of AASB 18 will be added to the body of AASB 1060 (this includes the requirements for classification of income and expenses into one of five categories, as well as the aggregation and disaggregation requirements)
  • The additional AASB 18 application guidance contained in Appendix B to AASB 18 will be included as Appendix B in AASB 1060 (retaining the same numbering as Appendix B to AASB 18)
  • Any content moved from AASB 101 to AASB 108 Basis of Preparation (including going concern) will be deleted.

Definitions in Appendix A of AASB 1060 will also be amended to align with those contained in Appendix A of AASB 18, and definitions contained in other standards will be deleted. Lastly, the AASB 18 consequential amendments to the presentation requirements in AASB 107 Statement of Cash Flows will also be incorporated into the body of AASB 1060.

What stays the same?

Importantly, the AASB proposes retaining two longstanding Tier 2 concessions:

  • Exemption from presenting a third statement of financial position when retrospective adjustments are made
  • Presentation of a statement of income and retained earnings instead of separate statements of comprehensive income and changes in equity by eligible entities.

In addition, new disclosures introduced by AASB 18 and not previously contained in AASB 1060 have not been included in the ED 341 proposals. They will be considered separately when the AASB reviews other changes arising from the release of the third edition of IFRS for SMEs.

Timing

The AASB proposes that the amendments apply to annual reporting periods beginning on or after 1 July 2030, with earlier application permitted. This would allow those Tier 2 entities that wish to align with AASB 18 classification and presentation requirements sooner to do so, while providing a three-year implementation period before the changes become mandatory for all Tier 2 entities.

Transition

The amendments would apply retrospectively. On initial application, entities would also be required to provide a reconciliation between previously the presented statement of profit or loss line items and the restated amounts presented under the new requirements for the comparative period immediately preceding adoption.

In line with the AASB 18 transition, an entity eligible to apply paragraph 18 of AASB 128 Investments in Associates and Joint Ventures can choose to change its election for measuring an investment in an associate or joint venture from the equity method to fair value through profit or loss in accordance with AASB 9 Financial Instruments.

Submit your comments

Comments can be provided to the AASB by 24 August 2026, either by:

Looking ahead

With amendments expected in the not-too-distant future, for preparers, auditors and users, now is an appropriate time to begin considering the practical implications of the AASB 18 requirements on Tier 2 financial statements. Many entities may find that the changes affect not only financial statement presentation, but also internal reporting, systems and performance measures.

For more information about the AASB 18 requirements, our masterclass series offers a practical, implementation‑focused approach to help you on your AASB 18 journey. You can also find more articles about AASB 18 challenges on our AASB 18 topic page, which includes resources such as our publication and webinars.