Accounting for Leases (RMG 110)


This guide is relevant to Commonwealth officials responsible for the financial reporting of lease transactions.


Key Points

This guide:

  • assists Commonwealth entities with the application of Australian Accounting Standards Board (AASB) 16 Leases (AASB 16)
  • summarises the major policy decisions of the Department of Finance (Finance) with regard to the application of AASB 16 and addresses the main issues raised by Commonwealth entities
  • aims to achieve consistency in accounting treatment of leases amongst Commonwealth entities, which is necessary for the preparation of the Commonwealth Consolidated Financial Statements (CFS)
  • provides Commonwealth entities with examples and tools to calculate lease balances for common scenarios.



Australian Accounting Standards Board (AASB) 16 Leases (AASB 16) removes the distinction between operating and finance leases for lessees and requires the recognition of a right-of-use (ROU) asset and lease liability on the balance sheet for most leasing arrangements.

AASB 16 is the Australian equivalent to the International Accounting Standard Board (IASB) International Financial Reporting Standard 16 Leases (IFRS 16), introduced to address concerns with the lack of transparency relating to lease rights and obligations. It is applicable for reporting periods commencing on or after 1 January 2019.

Application of all requirements is subject to the principles of materiality. Entities should document all assessments made in implementing the standard.


Related resources including appendices, related guidance and links are located in the right hand menu under Tools and templates.


Appendix A: Examples and tools to download

IFRS 16 Leases - Illustrative ExamplesThis document provides examples that accompany but are not part of IFRS 16. They illustrate aspects of IFRS 16 but are not intended to provide interpretative guidance.
Example Lease JournalsThe spreadsheet  provides several illustrative examples of common lease scenarios using the CBMS chart of accounts. Application of illustrative examples to specific entity lease details should be confirmed with audit teams as soon as possible. This attachment is available under Tools and templates.
Simple lease calculation toolThis tool, available to Commonwealth officials from CBMS GovTEAMS , is designed to calculate the lease balances required for monthly financial reporting. Application of the tool may not be suitable for all specific entity lease cases (e.g. some variations in lease modification scenarios), so it is recommended that model calculations be confirmed with audit teams as soon as practicable.

Appendix B: AASB 16 Implementation on Transition Date

This appendix provides guidance on AASB 16 implementation on transition date and is available under Tools and templates.


Other relevant publications

RMG-114 Accounting for decommissioning, restoration and similar provisions (‘make good’) (RMG-114)

RMG-125 Commonwealth entities financial statements guide (RMG-125)

Other relevant Australian Accounting Standards, as referenced in this guide.

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