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15RU-004 Discounting employee benefits using corporate bond yields

15RU-004 Discounting employee benefits

This Reporting Update summarises key implications of changing to the high quality corporate bond rate to discount long-term employee benefits like long service leave and defined benefit obligations.

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Australia now has a deep market in high quality corporate bonds. KPMG accepts the analysis in the Discount Rates for Australian Employee Benefit Liability Valuation Milliman Report in April 2015, which investigated the Australian high quality bond market and found sufficient evidence to support the above conclusion.

When the high quality corporate bond market is deep, entities (except public not-for-profit sector entities) must change to that rate for all employee benefits measured on a discounted basis under AASB 119 Employee benefits.

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KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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