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International Accounting Standard (IAS) 12
Income Taxes

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International Accounting Standard (IAS) 12

IAS 12

Income Taxes

Issued in October 1996: replaced July 1979 version of IAS 12

Revised in October 2000

Recent amendment: by IFRS 3 revised in January 2008

For all taxable temporary differences
--> a deferred tax liability is recognised.

Exceptions:
      (1) deferred tax liability from
           --> the initial recognition of goodwill

      (2) deferred tax liability from
           --> the initial recognition of an asset and a liability
           --> in a transaction that satisfies (2a) and (2b)
                 (2a) it is not a business combination
                 (2b) it does not affect accounting profit and
                        it does not affect taxable profit
                        (at the time of transaction)

For all deductible temporary differences
--> a deferred tax asset is recognised.

Exceptions:
      (1) deferred tax asset from
           --> the initial recognition of an asset and a liability
           --> in a transaction that satisfies (1a) and (1b)
                 (1a) it is not a business combination
                 (1b) it does not affect accounting profit and
                        it does not affect taxable profit
                        (at the time of transaction)

Current tax liabilities are measured
--> at the amount expected to be paid to tax authorities

Current tax assets are measured
--> at the amount expected to be received from tax authorities

Deferred tax liabilities are measured
      --> at the tax rates
      --> that are expected to apply
      --> to the period when the liability is settled.

Deferred tax assets are measured
      --> at the tax rates
      --> that are expected to apply
      --> to the period when the asset is realised.

Current and deferred tax are recognized in profit or loss

Exceptions:
(1) tax from a business combination
(2) tax from a transaction that is recognised outside profit or loss

IAS 12 Technical Notes