Deferred tax
Financial Dictionary — Taxation
Definition
Income tax payable or recoverable in future periods due to temporary differences.
Detailed Explanation
Deferred tax is income tax payable or recoverable in future periods arising from temporary differences and carryforwards.
Common Uses
- Used when computing taxes, preparing returns, and documenting tax positions.
- Used to evaluate transaction tax impact and ensure compliance (VAT/GST/Corporate Tax).
- Used to evaluate transaction tax impact and ensure compliance (VAT/GST/Corporate Tax).
Practical Example
- Example: The tax team applies **Deferred tax** to determine the correct tax treatment and to support the filing.
Why This Term Matters
- Why it matters: Reduces compliance risk, helps avoid penalties, and supports consistent tax reporting and defensible positions.