Key changes to TFRS 9 and TFRS 7 effective from 2027

Preparing for the next phase of financial instruments reporting 

The proposed changes reflect evolving business practices and financial markets, particularly the increasing use of ESG-linked financing arrangements, renewable energy contracts, structured lending features, and electronic payment systems. While many of the amendments are clarificatory in nature, they are expected to increase the level of judgement and analysis required in practice. 

Why the amendments matter

Over recent years, financing arrangements have become increasingly complex and often incorporate features linked to sustainability targets, nature-dependent energy pricing, or digital settlement mechanisms. In practice, this has resulted in diversity in interpretation under the current TFRS framework. 

The draft amendments aim to improve consistency and transparency by: 

clarifying the assessment of contingent cash flow features under the “solely payments of principal and interest” (“SPPI”) criterion; 

providing additional guidance for non-recourse and structured financing arrangements; 

improving consistency in the derecognition of liabilities settled through electronic payment systems; 

introducing practical guidance for renewable power purchase agreements (“PPAs”); and 

enhancing disclosures for certain equity investments measured at fair value through other comprehensive income (“FVOCI”). 

Summary of key proposed amendments 

Key areas of change 

1. ESG-linked and contingent cash flow features 

One of the key amendments relates to financial assets containing contingent cash flow features, including sustainability-linked loans and ESG related financing arrangements. 

Under the revised guidance, a financial asset may still satisfy the SPPI criterion where the contingent cash flows are not significantly different from those of an otherwise identical instrument without the feature. The amendments emphasise assessment based on the substance of the arrangement rather than solely its legal form. 

2. Non-recourse and structured financing arrangements 

The amendments introduce additional guidance for non-recourse financial assets and CLIs. 

Where repayment depends on specified underlying assets or cash flows, entities are expected to perform broader “look-through” assessments, including consideration of the legal structure, expected cash flows, and subordination arrangements within the transaction structure. 

3. Derecognition of liabilities in electronic payment systems 

The draft amendments also address diversity in practice regarding the derecognition timing of liabilities settled through electronic payment systems. 

Earlier derecognition may be permitted where specified conditions are met, including situations where the entity no longer has the practical ability to withdraw payment instructions and settlement risk is insignificant. The accounting treatment must be applied consistently within the same payment system. 

4. Renewable Power Purchase Agreements (“PPAs”) 

The amendments introduce practical guidance for renewable electricity arrangements where energy generation depends on natural conditions such as solar or wind availability. 

Under the proposed revisions, entities may achieve more consistent accounting outcomes through two key mechanisms: 

• Own-use exemption: Continued application of the own-use exemption is permitted where the entity remains a net purchaser of electricity over a reasonable seasonal cycle not exceeding 12 months. 
• Hedge accounting relief: Entities may apply variable nominal volume hedge accounting under specified circumstances, helping reduce profit or loss volatility arising from fluctuations in renewable electricity generation. 

5. FVOCI equity disclosures 

The proposed amendments to TFRS 7 enhance disclosure requirements for equity instruments designated at FVOCI. 

Entities would be required to separately disclose fair value changes relating to investments held at the reporting date and investments derecognised during the reporting period. 

Practical considerations 

Although the amendments are not yet effective, entities involved in ESG-linked financing, structured debt arrangements, renewable energy contracts, or high-volume electronic payment systems may benefit from beginning preliminary impact assessments early. 

Management should consider whether existing systems, documentation, and internal review processes remain sufficient to support the revised requirements and disclosures. Early assessment and discussion between management, finance teams, and auditors may help facilitate a smoother transition once the amendments become effective. 

References (in Thai): 

• TFAC Public Hearing Seminar Documents (May 2026). Retrieved from The Federation of Accounting Professions.