IASB proposes short-term amendment to IFRS 16 to extend relief for rent concessions in the context of the coronavirus pandemic  

The IASB today issued a proposal to extend by one year the effective period of the amendment to IFRS 16 Leases issued in May 2020 to provide lessees with relief from accounting for Covid 19-related lease concessions, such as rent holidays and temporary rent reductions (further information).

The practical expedient currently applies to rent concessions that only reduce payments due on or before June 30, 2021, and grants lessees an exemption from assessing whether a Covid 19 pandemic-related rent concession qualifies as a lease modification. The application of this optional exemption results in the accounting for these lease concessions as if they were not lease modifications. Among other things, this eliminates the need for the preparer of the financial statements to review all leases, to make a legal assessment of a corresponding rent concession against the background of the respective contractual arrangement and, if necessary, to determine new discount rates.

In response to stakeholder requests and because the Covid 19 pandemic continues, the IASB is now proposing to extend the relief to rent concessions that reduce only lease payments due on or before June 30, 2022.

Due to the urgency of the proposal, it is subject to a shorter comment period than usual. Therefore, the comment period ends on February 25, 2021.

Note: Changes to the accounting by lessors are still not intended.