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.
| Actual 2022 ($000) | Liabilities | Actual 2023 ($000) |
|---|---|---|
| Current liabilities | ||
| - | Onerous contracts | $68 |
| - | Total current liabilities | $68 |
| Non-current liabilities | ||
| $75 | Lease make-good | $688 |
| $75 | Total non-current liabilities | $688 |
| $75 | Total provision for other liabilities | $756 |
The increase in the provision for lease make-good in 2022–23 is for potential leasehold restoration costs if we vacate some leased buildings or floors in the future.