IFRS® Accounting Standards

IFRS 16 and COVID-19

Summary

The Accounting Standards Board (AcSB) is participating in the International Accounting Standards Board’s (IASB) project to amend IFRS 16 Leases.

The objective of this project is to create a practical expedient to address the challenges facing lessees as a result of the COVID-19 pandemic. The proposed amendments to IFRS 16 would include an exemption for COVID-19-related rent concessions affecting lease payments originally due in 2020. Specifically, it permits lessees to account for a change in lease payments resulting from COVID-19-related rent concessions as if the change was not a lease modification.

Staff Contact(s)

Katharine Christopoulos, CPA, CA Director, Accounting Standards Board

+1 416 204 3270

[email protected]

Project Status

Information gathering

Completed prior to April 2020.
Approving project

The IASB added the project to its agenda in April 2020.
Engaging Communities

The AcSB issued its Exposure Draft in April 2020.

The IASB issued its Exposure Draft in April 2020.
Deliberating feedback

The IASB and AcSB are deliberating comments on their Exposure Drafts

The IASB is expected to issue final amendments in Q2 2020
Final pronouncement

The IASB issued the final amendments in June 2020

The AcSB completed its endorsement process and incorporated the amendments into Canadian GAAP in July 2020.

News

April 6, 2021

International Activity

IASB issues Covid-19-Related Rent Concessions beyond June 30, 2021 (Amendment to IFRS 16)

The IASB issued an amendment to extend the scope of the optional exemption for COVID-19-related rent concessions by one year to June 30, 2022. The AcSB will incorporate the amendment, as well as the amendments to the Basis for Conclusions, into the CPA Canada Handbook upon completion of its due process activities.

June 11, 2020

News

AcSB endorses Covid-19-Related Rent Concessions (Amendment to IFRS 16)

This amendment permits lessees not to assess whether particular Covid-19-related rent concessions are lease modifications and, instead, account for those rent concessions as if they were not lease modifications. Effective for annual reporting periods beginning on or after June 1, 2020, this is now in Part I of the CPA Canada Handbook – Accounting. Earlier application is permitted, including in financial statements not yet authorized for issue at May 28, 2020. The Amendments to the Basis for Conclusions that accompany, but are not part of, IFRS 16 Leases are also now in Part I of the CPA Canada Handbook – Accounting.

May 29, 2020

International Activity

IASB issues Covid-19-Related Rent Concessions (Amendment to IFRS 16)

This amendment permits lessees not to assess whether particular Covid-19-related rent concessions are lease modifications and, instead, account for those rent concessions as if they were not lease modifications. The AcSB will incorporate the amendment, as well as the amendments to the Basis for Conclusions, into the CPA Canada Handbook upon completion of its due process activities.

May 12, 2020

International Activity

AcSB Response – IASB Exposure Draft, Covid-19-Related Rent Concessions (Proposed Amendment to IFRS 16)

On May 8, 2020, the AcSB submitted a comment letter responding to this Exposure Draft issued in April 2020. The letter agrees with the intent of the proposals, but recommends that the relief provided relate to all rent concessions that occur as a direct consequence of COVID-19, rather than limiting the proposal to lease payments due in 2020. The AcSB also recommends that the IASB provide the same relief from applying the lease modification guidance to lessors.

April 24, 2020

International Activity

IASB Exposure Draft – Covid-19-Related Rent Concessions (Proposed amendment to IFRS 16)

How is the IASB responding to the challenges facing lessees as a result of the COVID-19 pandemic? The IASB has issued an Exposure Draft amending IFRS 16 to include an exemption for COVID-19-related rent concessions. Canadian stakeholders are encouraged to submit their comments to the IASB by May 8, 2020.

Meeting & event summaries

May 13, 2020

AcSB Decision Summary – May 13, 2020

The AcSB continued discussing the review of disclosures relating to implementing IFRS 16 Leases, as disclosed in an entity’s 2019 annual financial statements. The Board directed staff to update the analysis of disclosures to include the effects of COVID-19 on the accounting for leases.

The AcSB also discussed its recent activities and those of the Financial Accounting Standards Board and the IASB relating to the effects of COVID-19 on the accounting for leases. The discussion included the IASB’s recent Exposure Draft, “COVID-19-Related Rent Concessions (Proposed Amendment to IFRS 16).” The IASB is expected to issue the final amendments to IFRS 16 by the end of May 2020. The AcSB expects to complete its endorsement process of the final IASB amendments and incorporate the amendments into Part I of the CPA Canada Handbook – Accounting on July 1, 2020. The amendments will be effective for annual reporting periods beginning on or after June 1, 2020.

Disclaimer

This project summary has been prepared for information purposes only. Decisions reported are tentative and reflect only the current status of discussions on this project, which may change after further Board deliberations. Decisions to publish Handbook material are final only after a formal voting process.