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IFRIC 21 Levies

IFRIC 21 provides guidance on when to recognise a liability for a levy imposed by a government.

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IFRIC 21 provides guidance on when to recognise a liability for a levy imposed by a government, other than those levies within the scope of other standards eg Income taxes and fines or penalties imposed for breaches of legislation.

A liability to pay levies is recognised when an obligating event takes place, such as the generation of revenue in the current period. There is no obligating event where a levy is triggered in a future period and an entity is economically compelled to continue to operate in the future period or the financial statements are prepared on a going concern basis suggesting that the entity will continue to operate in the future period.

If the obligating event occurs over a period of time, the liability is recognised progressively; if the obligating event is reaching a minimum threshold, the liability is recognised when the minimum threshold is met.

Illustrative examples accompany IFRIC 21 and these detail how to account for various types of levies.

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