P

C
This Std. shall be applied in acctg for income taxes
For the purposes of this Std., income taxes include all domestic and foreign taxes which are based on taxable profits; income taxes also include
taxes, such as withholding taxes, which are payable by a subsidiary, associate or joint arrangement on dist. to the reporting entity
This Std. does not deal with the methods of acctg for govt grants

C
Deferred tax liab
amounts of income taxes payable in future periods in respect of taxable temporary diff.
Deferred tax assets are the
amounts of income taxes recoverable in future periods in respect of:
a. deductible temporary diff.
b. the carryforward of unused tax losses
c. the carryforward of unused tax credits
Temporary diff.
diff. between the CA of an asset or liab in the SFP and its tax base
Temporary diff.
may be either:
a. taxable temporary diff., which are temporary diff. that will result in taxable amounts in determining taxable profit (tax loss) of future periods
when the CA of the asset or liab is recovered or settled
b. deductible temporary diff., which are temporary diff. that will result in amounts that are deductible in determining taxable profit (tax loss) of
future periods when the CA of the asset or liab is recovered or settled

V
The tax base of an asset is the amount that will be deductible for tax purposes against any taxable economic benefits that will flow to an entity
when it recovers the CA of the asset; if those economic benefits will not be taxable, the tax base of the asset is equal to its CA
The tax base of a liab is its CA, less any amount that will be deductible for tax purposes in respect of that liab in future periods
In consolidated financial statements, temp. diff. are determined by comparing the CAs of A&L in the consolidated financial statements with the
appropriate tax base
Current tax for current and prior periods shall, to the extent unpaid, be recognized as a liab; if the amount already paid in respect of current and
prior periods exceeds the amount due for those periods, the excess shall be recognized as an asset
The benefit relating to a tax loss that can be carried back to recover current tax of a previous period shall be recognized as an asset
A deferred tax liab shall be recognized for all taxable temp. diff., except to the extent that the deferred tax liab arises from:
a. the initial recog. of goodwill
b. the initial recog. of an asset or liab in a transaction which:
i. is not a business combination
ii. at the time of the transaction, affects neither acctg profit nor taxable profit (tax loss)
Examples of taxable temp. diff. which result in deferred tax liab:
a. interest revenue is included in acctg profit on a time proportion basis but may, in some jurisdictions, be included in taxable profit when cash is
collected
b. depreciation used in determining taxable profit (tax loss) may differ from that used in determining acctg profit
c. development costs may be capitalized and amortized over future periods in determining acctg profit but deducted in determining taxable profit
in the period in which they are incurred
d. the identifiable assets acquired and liab assumed in a business combination are recognized at their fair values in accordance with PFRS 3 but no
equivalent adjustment is made for tax purposes
temp. diff. arise when the tax bases of the identifiable assets acquired and liab assumed are not affected by the business combination or are
affected differently
e. assets are revalued and no equivalent adjustment is made for tax purposes
the diff. b/w the CA of a revalued asset and its tax base is a temp. diff. and gives rise to a deferred tax liab or asset; this is true even if:
i. the entity does not intend to dispose of the asset. In such cases, the revalued CA of the asset will be recovered through use and this will
generate taxable income which exceeds the depreciation that will be allowable for tax purposes in future periods
ii. tax on capital gains is deferred if the proceeds of the disposal of the asset are invested in similar assets
f. goodwill arises in a business combination
this Std. does not permit the recog. of the resulting deferred tax liab because goodwill is measured as a residual and the recog. of the
deferred tax liab would increase the CA of goodwill
 deferred tax liab for taxable temp. diff. relating to goodwill are, however, recognized to the extent they do not arise from the initial recog. of
goodwill
g. The tax base of an asset or liab on initial recog. differs from its initial CA, for example when an entity benefits from non-taxable govt grants
related to assets
the method of acctg for such a temp. diff. depends on the nature of the transaction that led to the initial recog. of the asset or liab:
i. in a business combination, an entity recognizes any deferred tax liab or asset and this affects the amount of goodwill or bargain
purchase gain it recognizes
ii. if the transaction affects either acctg profit or taxable profit, an entity recognizes any deferred tax liab or asset and recognizes the
resulting deferred tax expense or income in P/L
iii. if the transaction is not a business combination, and affects neither acctg profit nor taxable profit, an entity would recognize the
resulting deferred tax liab or asset and adjust the CA of the asset or liab by the same amount
h. the CA of investments in subsidiaries, branches and assoc. or interests in joint arrangements becomes different from the tax base of the
investment or interest
temp. diff. arise when the CA of investments in subsidiaries, branches and assoc. or interests in joint arrangements becomes different from
the tax base (which is often cost) of the investment or interest
an entity shall recognize a deferred tax liab for all taxable temp. diff. associated with investments in subsidiaries, branches and assoc., and
interests in joint arrangements, except to the extent that both of the following conditions are satisfied:
i. the parent, investor, joint venturer or joint operator is able to control the timing of the reversal of the temp. diff.
ii. it is probable that the temp. diff. will not reverse in the foreseeable future
an entity shall recognize a deferred tax asset for all deductible temp. diff. arising from investments in subsidiaries, branches and assoc., and
interests in joint arrangements, to the extent that, and only to the extent that, it is probable that:
i. the temp. diff. will reverse in the foreseeable future
ii. taxable profit will be available against which the temp. diff. can be utilized
A deferred tax asset shall be recognized for all deductible temp. diff. to the extent that it is probable that taxable profit will be available against
which the deductible temp. diff. can be utilized, unless the deferred tax asset arises from the initial recog. of an asset or liab in a transaction that:
a. is not a business combination
b. at the time of the transaction, affects neither acctg profit nor taxable profit (tax loss)
The following are examples of deductible temp. diff. that result in deferred tax assets:
a. retirement benefit costs may be deducted in determining acctg profit as service is provided by the employee, but deducted in determining
taxable profit either when contributions are paid to a fund by the entity or when retirement benefits are paid by the entity
b. research costs are recognized as an expense in determining acctg profit in the period in which they are incurred but may not be permitted as a
deduction in determining taxable profit (tax loss) until a later period
c. with limited exceptions, an entity recognizes the identifiable assets acquired and liab assumed in a business combination at their fair values at
the acquisition date
d. certain assets may be carried at fair value, or may be revalued, without an equivalent adjustment being made for tax purposes
It is probable that taxable profit will be available against which a deductible temp. diff. can be utilized when there are sufficient taxable temp. diff.
relating to the same taxation authority and the same taxable entity which are expected to reverse:
a. in the same period as the expected reversal of the deductible temp. diff.
b. in periods into which a tax loss arising from the deferred tax asset can be carried back or forward
When there are insufficient taxable temp. diff. relating to the same taxation authority and the same taxable entity, the deferred tax asset is
recognized to the extent that:
a. it is probable that the entity will have sufficient taxable profit relating to the same taxation authority and the same taxable entity in the same
period as the reversal of the deductible temp. diff. (or in the periods into which a tax loss arising from the deferred tax asset can be carried back
or forward). In evaluating whether it will have sufficient taxable profit in future periods, an entity:
i. compares the deductible temp. diff. with future taxable profit that excludes tax deductions resulting from the reversal of those deductible
temp. diff.
ii. ignores taxable amounts arising from deductible temp. diff. that are expected to originate in future periods, because the deferred tax
asset arising from these deductible temp. diff. will itself require future taxable profit in order to be utilized
b. tax planning opportunities are available to the entity that will create taxable profit in appropriate periods
A deferred tax asset shall be recognized for the carryforward of unused tax losses and unused tax credits to the extent that it is probable that
future taxable profit will be available against which the unused tax losses and unused tax credits can be utilized
An entity considers the following criteria in assessing the probability that taxable profit will be available against which the unused tax losses or
unused tax credits can be utilized:
a. whether the entity has sufficient taxable temp. diff. relating to the same taxation authority and the same taxable entity, which will result in
taxable amounts against which the unused tax losses or unused tax credits can be utilized before they expire
b. whether it is probable that the entity will have taxable profits before the unused tax losses or unused tax credits expire
c. whether the unused tax losses result from identifiable causes which are unlikely to recur
d. whether tax planning opportunities are available to the entity that will create taxable profit in the period in which the unused tax losses or
unused tax credits can be utilized
At the end of each reporting period, an entity reassesses unrecognized deferred tax assets; the entity recognizes a previously unrecognized
deferred tax asset to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered
 If the entitys taxable profit or tax loss is determined in a different currency, changes in the exchange rate give rise to temp. diff. that result in a
recognized deferred tax liab or asset; the resulting deferred tax is charged or credited to P/L
Current tax liab (assets) for the current and prior periods shall be measured at the amount expected to be paid to (recovered from) the taxation
authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period
Deferred tax A&L shall be measured at the tax rates that are expected to apply to the period when the asset is realized or the liab is settled, based
on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period
The measurement of deferred tax liab and deferred tax assets shall reflect the tax consequences that would follow from the manner in which the
entity expects, at end of reporting period, to recover or settle the CA of its A&L
In some jurisdictions, the manner in which an entity recovers (settles) the CA of an asset (liab) may affect either or both of:
a. the tax rate applicable when the entity recovers (settles) the CA of the asset (liab)
b. the tax base of the asset (liab)
If a deferred tax liab or deferred tax asset arises from a non-depreciable asset measured using the revaluation model in PAS 16, the measurement
of the deferred tax liab or deferred tax asset shall reflect the tax consequences of recovering the CA of the non-depreciable asset through sale,
regardless of the basis of measuring the CA of that asset
If a deferred tax liab or asset arises from investment property that is measured using the fair value model in PAS 40, there is a rebuttable
presumption that the CA of the investment property will be recovered through sale
The CA of a deferred tax asset shall be reviewed at the end of each reporting period; an entity shall reduce the CA of a deferred tax asset to the
extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred tax asset to be
utilized; any such reduction shall be reversed to the extent that it becomes probable that sufficient taxable profit will be available
Current and deferred tax shall be recognized as inc. or exp. and included in P/L for the period, except to the extent that the tax arises from:
a. a transaction or event which is recognized, in the same or a different period, outside P/L, either in OCI or directly in equity
b. a business combination
Current tax and deferred tax shall be recognized outside P/L if the tax relates to items that are recognized, in the same or a different period,
outside P/L; current tax and deferred tax that relates to items that are recognized, in the same or a different period:
a. in OCI, shall be recognized in OCI
b. directly in equity, shall be recognized directly in equity
An entity shall recognize acquired deferred tax benefits that it realizes after the business combination as follows:
a. acquired deferred tax benefits recognized within the measurement period that result from new information about facts and circumstances that
existed at the acquisition date shall be applied to reduce the CA of any goodwill related to that acquisition
If the CA of that goodwill is zero, any remaining deferred tax benefits shall be recognized in P/L
b. all other acquired deferred tax benefits realized shall be recognized in P/L
The diff. between the tax base of the employee services received to date, and the CA of nil, is a deductible temp. diff. that results in a deferred tax
asset; if the amount the taxation authorities will permit as a deduction in future periods is not known at the end of the period, it shall be
estimated, based on information available at the end of the period
An entity shall offset current tax assets and current tax liab if, and only if, the entity:
a. has a legally enforceable right to set off the recognized amounts
b. intends either to settle on a net basis, or to realize the asset and settle the liab simultaneously
An entity shall offset deferred tax assets and deferred tax liab if, and only if:
a. the entity has a legally enforceable right to set off current tax assets against current tax liab; and
b. the deferred tax assets and the deferred tax liab relate to income taxes levied by the same taxation authority on either:
i. the same taxable entity
ii. different taxable entities which intend either to settle current tax liab and assets on a net basis, or to realize the assets and settle the liab
simultaneously, in each future period in which significant amounts of deferred tax liab or assets are expected to be settled or recovered
The tax expense (income) related to P/L from ordinary activities shall be presented as part of P/L in the statement(s) of P/L and OCI