IFRS 16 (as adopted in Canada by AcSB)

IFRS 16 Lease Calculator
Canada

IFRS 16 lease calculator with Canada-specific regulatory context, Canadian Securities Administrators (CSA) / Canadian Public Accountability Board (CPAB) expectations, and local inspection findings.

Lease Terms

If checked, ROU asset depreciates over useful life instead of lease term (IFRS 16.32)

IFRS 16 Lease Audit Working Paper Template & Checklist — free PDF

Quick reference card, IBR documentation template, lease assessment flowchart, and audit working paper template. Plus one practical audit insight per week.

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IFRS 16.26 — At the commencement date, a lessee shall measure the lease liability at the present value of the lease payments that are not paid at that date.

IFRS 16.23–24 — At the commencement date, a lessee shall measure the right-of-use asset at cost.

ISA 500 — Sufficient appropriate audit evidence for the lease liability as independent audit evidence.

ISA 540 — Auditing accounting estimates — applies to the IBR determination and lease term judgment.

IFRS 16 in Canada — IFRS 16 (as adopted in Canada by AcSB)

Canada adopted IFRS 16 through the Accounting Standards Board (AcSB), effective for annual periods beginning on or after 1 January 2019. Canadian publicly accountable enterprises are required to apply IFRS as adopted by the AcSB, which is substantially identical to IASB-issued IFRS 16. Private enterprises in Canada may apply ASPE (Accounting Standards for Private Enterprises), which retains the operating/finance lease classification. The Canadian Securities Administrators (CSA) oversee securities regulation including financial reporting, while the Canadian Public Accountability Board (CPAB) inspects audit firms.

Regulatory Context — Canadian Securities Administrators (CSA) / Canadian Public Accountability Board (CPAB)

The CSA has included IFRS 16 in its continuous disclosure reviews, focusing on the quality of disclosures about key estimates and judgments. CPAB has published inspection findings highlighting IFRS 16 as an area where audit quality needs improvement, including inadequate IBR challenge and insufficient consideration of lease completeness. CPA Canada has published implementation guidance and webinars addressing practical application challenges.

Practical Guidance for Canada

For Canadian entities, the IBR should reference Canadian market conditions — Government of Canada bond yields for the risk-free component, plus entity-specific credit spreads. Provincial lease law varies across Canada, with each province governing commercial lease terms. Ontario's Commercial Tenancies Act and Quebec's Civil Code provide different frameworks for lease renewal and termination. Multi-provincial entities must consider jurisdiction-specific legal frameworks when assessing lease terms. Oil and gas, mining, and forestry entities should consider whether surface access agreements and mineral rights licences contain lease components under IFRS 16.

Audit Expectations

Canadian auditors follow CAS (Canadian Auditing Standards), which are based on ISA with limited Canadian modifications. CPAB inspections have focused on the audit of IFRS 16 estimates, with findings including: insufficient independent verification of IBR, inadequate lease completeness testing, and insufficient documentation of auditor challenge for material lease term judgments. CPA Canada's implementation guidance provides a useful reference for both preparers and auditors.

Canada-Specific Considerations

Canadian-specific considerations include the interaction between IFRS 16 and Canadian income tax. Under the Income Tax Act (Canada), operating lease payments are generally deductible under Section 18(1)(a). IFRS 16 does not change the Canadian tax treatment — CCA (capital cost allowance) applies to owned assets, while lease payments remain deductible for tax purposes. The CEWS (Canada Emergency Wage Subsidy) and CERS (Canada Emergency Rent Subsidy) programs during COVID-19 had specific implications for IFRS 16 lease modifications and rent concession accounting.

Common Inspection Findings

IBR determination not independently verified against Canadian market data

Provincial lease law variations not considered in lease term assessments

Embedded leases in resource sector service contracts not identified

COVID-era CERS and rent concession accounting inconsistently applied

IFRS 16 transition calculations contained errors not detected by audit procedures

Frequently Asked Questions — Canada

Is IFRS 16 identical in Canada to the IASB version?
Yes, substantially. The AcSB adopts IFRS as issued by the IASB without amendment for publicly accountable enterprises. There are no Canadian-specific modifications to IFRS 16. Private enterprises applying ASPE (Part II of the CPA Canada Handbook) follow different lease accounting rules.
What has CPAB found regarding IFRS 16 audit quality?
CPAB has identified: insufficient challenge of management's IBR determination, inadequate procedures over lease population completeness, insufficient documentation of auditor assessment of lease term judgments, and failure to adequately test transition calculations under the modified retrospective approach. CPAB has also noted that some firms have not adequately staffed IFRS 16 audit procedures given the complexity.
How do provincial lease laws affect IFRS 16 in Canada?
Provincial lease law varies significantly. Ontario's Commercial Tenancies Act, Quebec's Civil Code (which follows a civil law tradition unlike common law provinces), and Alberta's Commercial Tenancy Protection Act each provide different frameworks for renewal, termination, and tenant protection. Multi-provincial entities must assess lease terms under the applicable provincial law for each lease.
Does ASPE follow IFRS 16 for private Canadian companies?
No. ASPE (Part II of the CPA Canada Handbook, Section 3065) retains the operating/finance lease classification based on transfer of substantially all risks and rewards. Private Canadian companies do not apply IFRS 16 unless they voluntarily adopt IFRS.
How do Canadian resource sector surface leases interact with IFRS 16?
Surface access agreements, mineral rights licences, and similar resource sector arrangements require IFRS 16 lease identification analysis. If the agreement provides the right to use an identified area of land for a period in exchange for payments, it may contain a lease. Oil and gas entities should assess each surface lease against IFRS 16.9 criteria. Grazing rights, timber licences, and water rights may also require assessment.

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