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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.

Which version of the standard?

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Annual period starts
Effective version of standard
Notes on amendments 
On or after 1 January 2019 IAS 12 2019 Required Standards 
Includes amendments 1 – 5
1 January 2018 – 31 December 2018
IAS 12 2018 Required Standards
Includes amendments 1 - 3
1 January 2017 – 31 December 2017
IAS 12 2017 Required Standards
Includes amendment 3
1 January 2016 – 31 December 2016
IAS 12 2016 Required Standards
 -

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 2019 Required Standards.

Recent amendments

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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. Recognition of Deferred Tax Assets for Unrealised Losses amendments to IAS 12

To be applied to periods beginning on or after 1 January 2017. Earlier adoption is permitted.

The amendments to IAS 12 clarify that:

  • Unrealised losses on debt instruments measured at fair value and measured at cost for tax purposes can give rise to deductible temporary differences.
  • The carrying amount of an asset does not limit the estimation of probable future taxable profits.
  • When comparing deductible temporary differences with future taxable profits, the future taxable profits excludes tax deductions resulting from the reversal of those deductible temporary differences.

 

 
4. 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.

5. 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.

The following interpretations refer to IAS 12

Current proposals 

Transactions such as lease arrangements and decommissioning provisions give rise to both an asset and a liability. It is intended to narrow the IAS 12 initial recognition exemption such that it would not apply to such transactions, to the extent that amounts recognised in respect of taxable and deductible temporary differences are the same.

An exposure draft is expected in the second quarter of 2019.

Other resources

Factsheets:

This page was last updated 25 March 2019

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