Corporate Reporting Perspective on Federal Budget 2023

Four accounting issues to consider from the 2023/24 Federal Budget

The Federal Government’s Budget 2023/24 contains proposals that need to be considered from an accounting perspective. These include:

Petroleum Resources Rent Tax (PRRT)

Changes to the PRRT regime, in particular those that limit deductions in determining PRRT liabilities, could impact the sequence and amount of carry-forward credits, which in turn would impact deferred tax assets. In reviewing the tax impact of the proposed changes, preparers should make sure that the accounting implications, in particular on deferred tax balances, are also considered.

Infrastructure Investment Program

The Federal Government’s planned independent review of the Infrastructure Investment Program could result in certain elements of those projects (and the related funding) being delayed, modified or worst case, cancelled. This could also have accounting impacts:

  • Modification of financial liabilities – If the independent strategic review results in a change to the profile of funding and that, in turn, impacts the timing or amount of financial liabilities, you should evaluate to determine whether adjustments, if any, need to be made to financial liabilities
  • Grant income – Delayed funding for projects may lead to revenue being recognised later:
    • For-profit entities will have to wait until construction is complete in order to recognise grant income
    • Not-for-profit entities generally recognise grant income for the construction of a recognisable non-financial asset to be controlled by the entity as income during the period of construction. If construction is delayed, so too will the recognition of grant income.
  • Impairment – In the event that assets have been recognised (for instance as work-in-progress) and the related project is delayed or modified, an impairment test may need to be performed to test whether those asset values need to be written down or written off.

Preparers should not underestimate the potential accounting implications associated with the measures in this Budget. As always, if you need support, please contact our IFRS and Corporate Reporting team.

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