AASB 119 Employee Benefits has been revised to apply to both annual leave and long service leave.
The revised standard requires that employee benefits that are expected to be wholly settled beyond 12 months after the period when the services are rendered to be measured on a discounted basis. Therefore entities need to apply the wage inflation and discount rates in estimating annual leave and long service leave when measuring those liabilities on the discounted basis.
Note: Access to the wage and inflation discount rates, and the 2008 LSL model are only available to entities that are consolidated into the whole of state financial publications. While other entities (e.g. local councils) are welcome to use any of the resources available in the public domain of the website, the information in the restricted area will not be available to them.
The wage inflation and discount rates are used to calculate an entity’s liabilities for annual leave and long service leave if the discounted basis is used.
The Department of Treasury and Finance provides two alternative Models to assist Victorian public sector entities to calculate the long service leave liability.
The 2008 model (accessible only to agencies internal to the VPS network) uses a single weighted average discount rate, whilst the 2004 model uses the 12 year discount series from the Reserve Bank of Australia.
The 2008 long service leave model is available for use only by Victorian public sector departments and agencies that are consolidated into the State's financial statements (this excludes local councils, universities and other public sector entities). Other entities are welcome to use information in the public domain of the website. Use of the 2008 Model is recommended, but not mandatory.
DTF no longer supports the maintenance of the 2004 long service leave model (the 2004 model). It is recommended that departments and entities transition to the 2008 model or an alternative by 30 June 2016.
The 2004 model requires the use of 12 year discount rates to calculate long service leave entitlements, which are issued quarterly by DTF (see wage inflation and discount rates). There are two versions of the 2004 model: