IFRS | IASB extends rent concessions related to COVID-19

The International Accounting Standards Board (IASB) has issued COVID-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16), an extension to the practical expedient period in the amendments to IFRS 16 Leases made last year.

This extension is for one year, so the application period now extends until June 30, 2022.

In May 2020, the IASB published an amendment COVID-19-Related Rent Concessions (amendment to IFRS 16) (the 2020 amendment). The 2020 amendment added a practical expedient to IFRS 16 which provides relief for lessees in assessing whether specific COVID-19 rent concessions are considered to be lease modifications. Instead, if this practical expedient is applied, these rent concessions are treated as if they are not lease modifications.

In light of the impact the COVID-19 pandemic has had on business activity across the world, and response from feedback received from stakeholders, the IASB decided to extend this relief for one year to provide relief for recent concessions in relation to COVID-19 that reduce payments up until June 30, 2022.

The extension is effective for annual reporting periods beginning on or after April 1, 2021.

Our thoughts

We welcome this latest amendment to extend the scope and application date of the relief for another year. The COVID-19 pandemic is still very prevalent around the world and it is, therefore, reasonable that lessors would still be providing rent concessions to lessees for lease payments beyond June 30, 2021.