Deferred tax
Financial Dictionary — Taxation
Definition
Income tax payable or recoverable in future periods due to temporary differences.
Use cases, Example & Why it matters
Use cases
- 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).
Example
- Example: The tax team applies **Deferred tax** to determine the correct tax treatment and to support the filing.
Why it matters
- Why it matters: Reduces compliance risk, helps avoid penalties, and supports consistent tax reporting and defensible positions.