04/06/2026
Is that new acquisition a "business" or just a group of assets? The answer could save you a lot of admin.
Starting 1 January 2027, the third edition of IFRS for SMEs® Accounting Standard introduces a sharper, more practical definition of what constitutes a business. For many South African SMEs, especially those in retail, property, and hospitality, this is a welcome change.
The big shift? It’s all about the "Engine." To be classified as a business, you aren't just buying the "stuff" (inventory or equipment); you must be buying the processes and systems that make those things produce value. If you’re just buying a space to refurbish it under your own brand, you’re likely buying an asset.
Why this is good news for your bottom line:
Simpler Reporting: No more complex goodwill calculations or unnecessary amortisation.
Protected Profits: Transaction and legal fees can now be capitalised rather than expensed immediately.
Lighter Admin: Fewer disclosure tables and notes mean a smoother reporting season.
At PKF, we believe your financial statements should reflect the economic reality of your hard work. We’re here to help you apply these new "Concentration Tests" to your growth plans, ensuring you stay ahead of the 2027 deadline.
Planning an acquisition? Let’s ensure your accounting is as strategic as your vision.
https://www.pkf.co.za/contact/
