Amendments to the Fair Value Option for Investments in Associates and Joint Ventures - Proposed amendments to IAS 28

Proposed amendments to the fair value option in IAS 28 Investments in Associates and Joint Ventures

We want to hear your feedback on the International Accounting Standards Board's (IASB) proposed narrow-scope amendments to the fair value option in IAS 28. These proposed amendments aim to broaden the scope of investments in an associate or joint venture that can be measured using the fair value option.

Your comments will help inform our feedback to the IASB on its Exposure Draft Amendments to the Fair Value Option for Investments in Associates and Joint Ventures - Proposed amendments to IAS 28.

Consultation Overview

Paragraphs 18-19 of IAS 28 permit an entity to elect to measure an investment (or a portion of an investment) in an associate or joint venture at fair value through profit or loss, in accordance with IFRS 9 Financial Instruments, when that investment is held by, or held indirectly through, specified investment-focused entities, such as:

  • venture capital organisations,
  • mutual funds,
  • unit trusts; and
  • similar entities (including investment-linked insurance funds).

Feedback from stakeholders, particularly from those within the insurance sector, reported diversity in how the scope of investments to which the fair value option in IAS 28 applies is interpreted in practice, particularly around what characteristics were needed for investing entities and funds to be assessed as “similar entities”.

The implementation and application of IFRS 18 Presentation and Disclosure in Financial Statements, may lead to further diversity around the use of the fair value option, due to required presentation changes in the statement of profit or loss, and transitional provisions with IFRS 18 that permits an entity to elect the fair value option on initial application of the standard.  

IFRS 18 requires income from all investments accounted for using the equity method to be classified in the investing category. In contrast, income and expenses from investments in associates and joint ventures accounted for at fair value through profit or loss must be classified in the operating category if the entity invests in these assets as a main business activity.

Some entities, particularly those in the insurance industry, consider particular investments in associates and joint ventures to relate to their main business activities and the related income and expenses to be part of their operating results. Therefore, to classify the income and expenses in the operating category, more insurance entities will look to make use of the fair value option for these investments.

 

In response to this feedback, IASB is proposing to clarify that entities who invest in associates and joint ventures as part of their main business activities (determined in line with IFRS 18) are within the scope of “similar entities” and are eligible to apply the fair value option in IAS 28.

An entity must assess whether it has a main business activity of investing in assets using the guidance in IFRS 18 paragraphs B30–B41. Examples of entities that might invest in assets, as noted in IFRS 18, as a main business activity, include:

(a)    investment entities as defined by NZ IFRS 10 Consolidated Financial Statements;

(b)    investment property companies; and

(c)    insurers.

These proposals will not impact entities that are already applying the fair value option but are intended to broaden the scope of entities who can apply this fair value option.

The IASB’s intention is for any clarification or amendments to the fair value option to be effective on or before the effective date of IFRS 18, which is 1 January 2027.

Your feedback is important

If you are an entity that invests in assets regularly as part of your business activities and have not been applying the fair value option, then we encourage you to read the IASB Exposure Draft and share your comments with us. More information on the consultation, as well as additional resources, can be found on the IASB's website here.

Your comments will help us ensure that, ultimately, NZ IAS 28 provides for appropriate reporting outcomes for reporting entities in Aotearoa New Zealand.

How to provide feedback

XRB submissions close on Wednesday, 1 April 2026.

You can send your comments directly to the IASB by Monday, 20 April 2026. If you do, sending a copy of your submission to the XRB via accounting@xrb.govt.nz would be appreciated. 

All submissions will be published on the XRB website unless confidentiality is requested. If you object to the release of any information in your submission, please identify the specific parts and the reasons under the Official Information Act 1982. We reserve the right not to publish defamatory submissions.  Submissions are subject to the Official Information Act 1982 and the Privacy Act 2020. The XRB will handle personal information in accordance with these Acts.

Consultations