On 7 July 2020, ASIC issued a temporary no-action position to allow right-of-use lease assets to count in satisfying AFSL compliance requirements.
The new lease standard is effective for the first time in 2020 for June year-end companies. The change can significantly increase right-of-use assets and lease liabilities for lessees.
ASIC had previously stated that they expect AFSL holders to include lease liabilities as part of total liabilities in the net tangible asset calculation as part of AFSL compliance. However, right-of-use assets are expected by ASIC to generally be treated as intangible assets and therefore would not be included within tangible assets forming part of the NTA calculation.
As a result, ASIC was expecting some AFSL holders to face difficulty in complying with the NTA requirement of their AFSL.
By issuing the temporary no-action position, ASIC will:
allow licensees to use right-of-use lease assets to count towards their financial resource requirements
not take action against licensees in relation to past breaches, when the breach arises from right-of-use lease assets not being able to be counted towards meeting those requirements.
How we can assist
Our team at ShineWing Australia can:
advise you on the impact of the new lease standard
advise you the current AFSL compliance requirements
provide assurance service for AFSL holders.