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IAS 12 Income Taxes

IAS 12 Income Taxes prescribes the accounting treatment for income taxes, including how to account for the current and future tax consequences of assets, liabilities and transactions recognised in the financial statements.

Published October 1996. Effective 1 January 1998.

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Synopsis

  • Current tax for the current and prior periods is recognised as a liability to the extent that it remains outstanding, or an asset, to the extent that amounts paid are in excess of that due. It should be recognised using the tax rates that have been enacted or substantively enacted by the reporting date.
  • Deferred tax liabilities are recognised for taxable temporary differences
  • Deferred tax assets are recognised for deductible temporary differences and unused tax losses and credits to the extent that a taxable profit will be available against which they can be utilised.
  • Deferred tax assets and liabilities should be measured at the tax rates expected to apply to the date when the liability is settled or asset realised.

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Annual period starts
Effective version of standard
Notes on amendments
On or after 1 January 2023 IAS 12 2021 Required Standards and Deferred Tax related to Assets and Liabilities arising from a Single Transaction Includes amendments 1, 2, 3, 4 and 5*
1 January 2019 - 31 December 2022 IAS 12 2021 Required Standards
Includes amendments 1 – 4
1 January 2018 – 31 December 2018
IAS 12 2018 Required Standards
Includes amendments 1 - 2

*Not UK endorsed as at 23 June 2021. Read more on UK endorsement of IFRS standards. Not EU endorsed as at 23 June 2021. Read more on EU endorsement of IFRS standards.

The Required Standards book for a particular year assumes that there is no early application of issued but not yet effective IFRSs; The Issued Standards book assumes early application of all issued IFRSs.

For the latest version of the standard, and where the amendments are to be adopted early, refer to IAS 12 2021 Required Standards and Deferred Tax related to Assets and Liabilities arising from a Single Transaction.

Recent amendments

Full access to details of all the amendments is only available to Financial Reporting Faculty members. Find out how to join the faculty.

1. IFRS 9 Financial Instruments amendment to IAS 12

Effective for annual periods beginning on or after 1 January 2018. Earlier application is permitted.

As a result of the issue of IFRS 9.

IAS 12 is amended to delete reference to assets revalued in accordance with IAS 39 and instead refer to assets revalued in accordance with IFRS 9.

2. IFRS 15 Revenue from Contracts with Customers amendments to IAS 12

Effective for annual periods beginning on or after 1 January 2018. Earlier application is permitted.

As a result of the issue of IFRS 15, IAS 12 is amended to refer to accounting for interest, dividend and royalty revenue in line with the new standard.

3. IFRS 16 amendment to IAS 12

To be applied to periods beginning on or after 1 January 2019. Earlier adoption is permitted.

IAS 12 is amended to include reference to IFRS 16 in respect of assets carried at fair value.

4. Annual Improvements 2015-17

To be applied to periods beginning on or after 1 January 2019. Earlier adoption is permitted.

An amendment to IAS 12 clarifies that the presentation requirements of paragraph 52B of IAS 12 apply to all payments on financial instruments classified as equity that are distributions of profits and are not limited to the circumstances described in paragraph 52A of IAS 12.

5. Deferred Tax related to Assets and Liabilities arising from a Single Transaction*

Effective for annual periods beginning on or after 1 January 2023. Earlier application is permitted. 

The amendments to IAS 12 clarify that the IAS 12 initial recognition exemption is not applicable to transactions, such as lease arrangements and decommissioning provisions, that give rise to both an asset and a liability, to the extent that amounts recognised in respect of taxable and deductible temporary differences are the same.

*Not UK endorsed as at 23 June 2021. Read more on UK endorsement of IFRS standards. Not EU endorsed as at 23 June 2021. Read more on EU endorsement of IFRS standards.

The following interpretations refer to IAS 12

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This page was last updated 23 June 2021

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