Request for Information - Post-implementation Review of IFRS 16 Leases
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Post-Implementation Review: IFRS 16 Leases We want to hear your feedback on how well the requirements in NZ IFRS 16 Leases are working, including the costs and benefits of applying these requirements to your leases. Your comments will help inform our feedback to the IASB on its Request for Information - Post-Implementation Review of IFRS 16 Leases. |
Objectives of IFRS 16
NZ IFRS 16 Leases became effective on 1 January 2019 and is equivalent to the International Accounting Standard Board's (IASB's) IFRS 16 standard, The standard introduced a single lessee accounting model that eliminated the distinction between operating and finance leases for lessees. Under NZ IFRS 16, lessees recognise a right-of-use asset and a lease liability on the balance sheet for most leases, with limited exceptions for short-term leases and leases of low-value assets.
The standard aims to:
- improve transparency and comparability of on-balance sheet and off-balance sheet leases across entities,
- provide a more faithful representation of a company’s financial position and performance,
- reduce opportunities for structuring of lease agreements for particular accounting outcomes, and
- provide investors and other users with more relevant and decision-useful information about lease arrangements and related cash flows.
Why are we consulting?
The IASB is requesting information to inform their post-implementation review (PIR) of IFRS 16 to assess whether the standard is working as intended and achieving its objectives. To support this, we are seeking evidence-based feedback from New Zealand stakeholders on practical issues with NZ IFRS 16, and potential solutions. This will help inform our submission on the IASB’s review and ensure that any resulting amendments or clarifications address issues relevant and fit-for-purpose in the New Zealand context.
The IASB's RFI is focused on specific issues with applying IFRS 16 and whether the standard is operating as intended and fulfilling its objectives. The PIR is not a reconsideration of the core principles of the standard, such as the fundamental single lessee accounting model, lessor accounting, and how a lease is identified.
New Zealand-specific matters of interest
Since NZ IFRS 16 was introduced, we have heard feedback from stakeholders about the costs and impacts of applying the standard in New Zealand. We also examined lease disclosures of over 100 Tier 1 reporting entities to examine what type of information was being reported. This feedback and our analysis of public disclosures have helped shape the key focus areas outlined below.
We are now seeking your input on these areas to help us better understand these issues and to identify where further improvements or clarifications may be needed in NZ IFRS 16. We want feedback from both for-profit preparers and users of financial statements.
| Area | Feedback requested from Preparers | Feedback requested from Users |
|---|---|---|
| Cost-benefit of ongoing compliance | We seek feedback on whether ongoing NZ IFRS 16 compliance costs remain significant for preparers, what the main sources of these costs are, and whether they are proportionate to the benefits. | We are interested in how NZ IFRS 16 information is used to assess financial position and performance, and its value for analysis and decision-making. |
| Discount rates – use of interest rates implicit in the lease (IRIL) and incremental borrowing rates (IBR) | Most entities use IBR rather than IRIL for discount rates. We want to know the reasons for this, any challenges in determining discount rates, and details of the methodologies used. | We seek views on the usefulness of specific, quantified discount rates and clear explanations of how rates are determined for comparing lease obligations. |
| Long-term property leases | Long-term leases are common in NZ. We want to understand the practical, measurement, and judgement challenges in managing and accounting for these leases, and whether current requirements are fit for purpose. | We are interested in what information about long-term leases is most useful for understanding financial position, risk, or future cash flows. |
| Disclosure practices and comparability | There is variation in the level of detail provided in lease disclosures. We seek reasons for this variation (e.g., materiality, system limitations), challenges in preparing disclosures, and whether it affects comparability and transparency. | We want to know which lease disclosures are most useful, and if any areas are inadequate or need improvement. |
| User adjustments to reported figures | We seek preparer views on what lease information users (including banks and lenders) request, whether users ask for information beyond NZ IFRS 16 disclosures, and if different or additional information is needed to meet user needs. | We want to understand why users adjust for NZ IFRS 16, what information is lacking, and how presentation or disclosure could be improved. |
The IASB's RFI also includes questions on several additional topics, such as the interaction of IFRS 16 with other standards (e.g., IFRS 9 and IFRS 15), and specific matters like sale and leaseback transactions and rent concessions. While these topics have not emerged as significant issues in New Zealand, we encourage you to review the RFI and to provide feedback on any issues relevant to your experience.
How to provide feedback
You can send your submission to the XRB via accounting@xrb.govt.nz, or complete one of the feedback forms below.
XRB Submissions close on Monday 15 September 2025.
You can also send your comments directly to the IASB by Wednesday 15 October 2025. 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 line with these Acts.