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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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The following interpretations refer to IAS 12

Other resources

Factsheets

Financial Reporting Council

  • Thematic review: Deferred taxes
    FRC review published in September 2022. It discusses recognition of deferred tax assets, disclosure of recognised and unrecognised deferred tax assets, judgements and estimates, presentation and other disclosures, and key expectations. An appendix gives examples of positive and negative evidence relevant to assessing the probability of future taxable profits.

This page was last updated 30 August 2022.

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