NFP Peppercorn Lease accounting (Take 2)


With the office Christmas parties already long forgotten, and most people already in holiday mode, the AASB released a new accounting standard on 24 December 2018, that would apply from 1 January 2019. Though maybe without the appropriate fanfare, this really was an early Christmas present for all NFP organisations that have one or more peppercorn leases in place.


At only 12 pages long, this is quite a short accounting standard, but it’s impact will be very significant. The Accounting Standards Board has considered the industry feedback that applying fair value measurement to peppercorn leases that are in place creates many difficulties and further guidance to the sector is required. This new standard that goes by the name …

AASB 2018-8: Amendments to Australian Accounting Standards – Right-of-Use Assets of Not-for-Profit Entities

… essentially allows organisations to continue to record such leases at cost as a temporary measure. No specific time frame has been provided as to when this temporary measure will be removed, which means that all we can now do is sit back and wait until the AASB releases further guidance.

You can read the new standard and related information on the AASB website here:

In the reasons for issuing the standard, the AASB has specifically highlighted the significant restrictions that normally apply to such properties, which can make it very difficult to quantify the fair value of the right to use asset, as well as the ACNC Legislative Review recommendations, which could see changes to the reporting thresholds in the near future.

Should you have any questions in relation to how this new standard might impact on your circumstances, we would encourage you to contact our office.