25 March 2015

Deloitte commented on the proposed amendments to IFRS 2

Deloitte agrees that reducing the number of equity instruments delivered in lieu of settlement of an employee’s tax liability directly resulting from the share-based payment should not change the classification of a share-based payment transaction that would otherwise be classified as equity-settled in its entirety.

Deloitte notes, however, that the words “obliged by tax laws or regulations to withhold an amount” in proposed paragraph 33D could be read as limiting the amendment to jurisdictions in which withholding of shares (rather than, for example, deductions from the employee’s salary) are required. Deloitte does not believe that such a detail should result in differing classification of arrangements in which the employee will receive shares less an amount necessary to settle their resulting tax liability.

In reference to the statement in paragraph BC16 of the Basis for Conclusions on the exposure draft on convergence with US GAAP, Deloitte also notes that minimum statutory withholding requirements is one of the topics under discussion as part of the FASB’s’ current project ‘Employee Share-based Payment Accounting Improvements’.

Deloitte recommends that the Board monitor that project to determine whether it indicates that any further amendments to IFRS 2 might be appropriate. 

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