AASB 107 Statement of Cash Flows 7-9: Admit to cash equivalents only short-maturity, low-risk holdings held to meet short-term commitments, treat on-demand overdrafts as part of cash where they are part of cash management, and exclude transfers between cash components

What does 7-9 require?

An investment counts as a cash equivalent when it is held to meet near-term cash needs rather than as an investment, converts readily to a known amount and carries insignificant value risk, which in practice means a maturity of around three months or less from acquisition. Equity holdings are excluded unless they are cash equivalents in substance, such as preference shares bought shortly before a fixed redemption date. A bank overdraft repayable on demand that swings between credit and debit as part of day-to-day cash management belongs inside cash and cash equivalents, not among financing items. Transfers between items that are themselves cash or cash equivalents, including placing surplus cash in cash equivalents, are cash management and are not reported as cash flows.