FRED 68: Draft Amendments to FRS 102 - Payments by subsidiaries to their charitable parents that qualify for gift aid


In September 2017, the Financial Reporting Council (FRC) issued Financial Reporting Exposure Draft (FRED) 68 Draft Amendments to FRS 102 - Payments made by subsidiaries to their charitable parents that qualify for gift aid in relation to gift aid payments made by a subsidiary to its charitable parent.

The proposals arise as a result of “significant differences” in the accounting treatment for such payments.  The payments are made during the nine months following the relevant reporting date, and are a distribution to owners but a donation for tax purposes.

For a subsidiary of a charitable parent, FRED 68 proposes that the tax effects of a gift aid payment, when it is probable that it will be made in the nine months following the reporting date, will be taken into account at the reporting date.  It also clarifies that:

  1. the gift aid payment, as a distribution to owners, shall not be accrued at the reporting date (unless a deed of covenant is in place) and shall be recognised in equity; and
  2. the tax effects of the gift aid payment shall be recognised in profit or loss.

The FRC indicates that the draft amendments will “improve the consistency of reporting between entities and the relevance of information provided to users”.

The FRC intends to finalise the proposals in FRED 68 at the same time as those within FRED 67 which it consulted on in March 2017 as part of the FRC’s first triennial review of FRS 102.


Current status of the project

FRED 68 was issued on 20 September 2017.  Comments were requested by 20 October 2017.

In December 2017, the FRC published amendments to FRS 102 as a result of consultation in FRED 68.

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