Inland Revenue recognises a provision for future payments of uncertain amounts or timing where there is a present obligation (either legal or constructive) as a result of a past event, and it is probable that a payment will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Provisions are not recognised for net deficits from future operating activities.
Provisions are recorded at the best estimate of the expenditure required to settle the obligation. Provisions to be settled beyond 12 months are recorded at their present value and are discounted using market yields on government bonds at balance date with terms to maturity that match, as closely as possible, the estimated timing of the future cash flows, where applicable. The increase in the provision due to the passage of time is recognised as an interest expense and is included in finance expenses.
The onerous lease provision totalling $232,000 as at 30 June 2021 was for 2 unused floor spaces. Onerous leases have been assessed as at 30 June 2022 and no further provision is required.
|Actual 2021 ($000)||Liabilities||Actual 2022 ($000)|
|$229||Total current liabilities||n/a|
|$70||Total non-current liabilities||$75|
|$299||Total provision for other liabilities||$75|