📖 Overview
This standard addresses the accounting treatment for income taxes, including calculation of current tax liability and deferred tax. Deferred tax arises from temporary differences between the carrying amount of assets and liabilities and their tax base.
🎯 Scope
This standard applies to accounting treatment for income taxes, including:
- Current tax payable on taxable profit.
- Deferred tax arising from temporary differences between the carrying amount and tax base of assets and liabilities.
Does not apply to VAT or indirect taxes.
⚙️ Key Principles
1. **Tax Base**: The amount attributed to an asset or liability for tax purposes.
2. **Temporary Differences**: The difference between the carrying amount of an asset or liability and its tax base.
- **Deductible Temporary Differences**: Result in a deferred tax asset.
- **Taxable Temporary Differences**: Result in a deferred tax liability.
3. **Recognition of Deferred Tax**: Recognized for all temporary differences, with limited exceptions.
📏 Measurement
**Current Tax:**
- Calculated using tax rates enacted or substantively enacted at the balance sheet date.
**Deferred Tax:**
- Measured using tax rates expected to apply when the asset or liability is settled.
- Deferred tax is not discounted.
**Tax Losses:**
- A deferred tax asset is recognized for unused tax losses if it is probable that future taxable profit will be available.
✅ Recognition
Current and deferred tax are recognized in the income statement, except when related to:
- An item recognized in OCI.
- An item recognized directly in equity.
- A business combination.
A deferred tax asset is recognized only if it is probable that future taxable profit will be available to utilize the difference.
📊 Presentation
**On the Statement of Financial Position:**
- **Current Tax Assets**: Tax paid in advance or recoverable.
- **Current Tax Liabilities**: Unpaid tax due.
- **Deferred Tax Assets**: Presented as non-current assets.
- **Deferred Tax Liabilities**: Presented as non-current liabilities.
**On the Income Statement:**
- Income tax expense (income) is presented as a separate line item.
📝 Disclosure Requirements
Disclosures required:
- Income tax expense (income).
- Reconciliation between accounting tax expense and tax calculated on accounting profit.
- Reasons for not recognizing a deferred tax asset.
- Components of deferred tax assets and liabilities.
- Unused tax losses and tax credits.
- Accounting policies for taxes.
🔗 Related Standards
IAS 1 (Presentation of Financial Statements), IFRS 3 (Business Combinations)