International GAAP® 2019: Generally Accepted Accounting Practice under International Financial Reporting Standards
Page 466
9.5
Consideration of changes in facts and circumstances ................................ 2446
9.6
Disclosures relating to uncertain tax treatments ......................................... 2447
9.7
Recognition of an asset for payments on account ...................................... 2447
9.8 Transition
to
IFRIC 23 ...................................................................................... 2449
9.8.1
First-time adopters ............................................................................ 2449
10 ALLOCATION OF TAX CHARGE OR CREDIT .............................................. 2449
10.1 Revalued and rebased assets ........................................................................... 2450
10.1.1
Non-monetary assets with a tax base determined in a
foreign currency.................................................................................. 2451
10.2 Retrospective restatements or applications .................................................. 2451
10.3 Dividends and transaction costs of equity instruments ............................. 2452
10.3.1
Dividend subject to differential tax rate ....................................... 2452
10.3.2 Dividend subject to withholding tax .............................................. 2453
10.3.3 Intragroup dividend subject to withholding tax .......................... 2453
10.3.4 Incoming
dividends
...........................................................................
2453
10.3.5 Tax benefits of distributions and transaction costs of
equity instruments ............................................................................. 2454
10.3.5.A
Tax benefits of transaction costs of equity
instruments ..................................................................... 2455
10.4 Gains and losses reclassified (‘recycled’) to profit or loss .......................... 2456
10.4.1
Debt instrument measured at fair value through OCI
under IFRS 9 ........................................................................................ 2457
10.4.2 Recognition of expected credit losses with no change in
fair value .............................................................................................. 2459
10.5 Gain/loss in profit or loss and loss/gain outside profit or loss offset
for tax purposes ................................................................................................. 2460
10.6 Discontinued
operations
..................................................................................
2462
10.7 Defined
benefit
pension plans ........................................................................ 2463
10.7.1
Tax on refund of pension surplus .................................................. 2465
10.8 Share-based payment transactions ................................................................ 2465
Income
taxes
2339
10.8.1
Allocation of tax deduction between profit or loss and
equity ................................................................................................... 2465
10.8.2 Determining the tax base ................................................................. 2468
10.8.3 Allocation when more than one award is outstanding ............... 2471
10.8.4 Staggered
exercise of awards .......................................................... 2472
10.8.5 Replacement
awards
in a business combination .......................... 2475
10.8.6 Share-based
payment
transactions subject to transitional
provisions of IFRS 1 and IFRS 2 ..................................................... 2476
10.9 Change in tax status of entity or shareholders ............................................ 2476
10.10 Previous revaluation of PP&E treated as deemed cost on transition
to IFRS ................................................................................................................. 2476
10.11 Disposal of an interest in a subsidiary that does not result in a loss
of control .............................................................................................................. 2477
11 CONSOLIDATED TAX RETURNS AND OFFSET OF TAXABLE PROFITS
AND LOSSES WITHIN GROUPS .................................................................... 2478
11.1
Examples of accounting by entities in a tax-consolidated group ............ 2479
11.2 Payments for intragroup transfer of tax losses ............................................ 2480
11.3 Recognition of deferred tax assets where tax losses are transferred
in a group .............................................................................................................. 2481
12 BUSINESS COMBINATIONS ......................................................................... 2481
12.1 Measurement and recognition of deferred tax in a business
combination ........................................................................................................ 2482
12.1.1
Determining the manner of recovery of assets and
settlement of liabilities...................................................................... 2482
12.1.1.A
Changes in tax base consequent on the
business combination ................................................... 2483
12.1.2
Deferred tax assets arising on a business combination .............. 2484
12.1.2.A
Assets of the acquirer ................................................... 2484
12.1.2.B Assets
of
the acquiree .................................................. 2484
12.1.3
Deferred tax liabilities of acquired entity ..................................... 2484
12.2 Tax deductions for replacement share-based payment awards in a
business combination ........................................................................................ 2484
12.3 Apparent immediate impairment of goodwill created by deferred
tax ......................................................................................................................... 2485
12.4 Tax deductions for acquisition costs ............................................................. 2485
12.5 Temporary differences arising from the acquisition of a group of
assets that is not a business .............................................................................. 2486
13 PRESENTATION .......................................................................................... 2486
13.1 Statement of financial position ....................................................................... 2486
13.1.1
Offset .................................................................................................... 2486
2340 Chapter 29
13.1.1.A
Current tax ..................................................................... 2486
13.1.1.B Deferred
tax
...................................................................
2487
13.1.1.C
No offset of current and deferred
tax ....................... 2487
13.2 Statement of comprehensive income ............................................................ 2487
13.3 Statement
of
cash flows .................................................................................... 2488
14 DISCLOSURE ............................................................................................... 2488
14.1 Components of tax expense ............................................................................ 2488
14.2 Other
disclosures
...............................................................................................
2489
14.2.1
Tax (or tax rate) reconciliation ....................................................... 2490
14.2.2 Temporary differences relating to subsidiaries, associates,
branches and joint arrangements ................................................... 2492
14.3 Reason for recognition of particular tax assets............................................ 2492
14.4 Dividends
............................................................................................................. 2493
14.5 Examples
of
disclosures ................................................................................... 2493
14.6 Discontinued
operations – interaction with IFRS 5 ................................... 2497
List of examples
Example 29.1:
PP&E attracting tax deductions in advance of accounting
depreciation ........................................................................................ 2344
Example 29.2:
Rationale for initial recognition exception ................................... 2381
Example 29.3:
Deferred tax asset on initial recognition of goodwill ................. 2383
Example 29.4:
Non-deductible PP&E ...................................................................... 2384
Example 29.5:
Inception of loan with tax-deductible issue costs ...................... 2385
Example 29.6:
Inception of loan with non-deductible issue costs ..................... 2385
Example 29.7:
Purchase of PP&E subject to tax-free government grant ......... 2385
Example 29.8:
Impairment of non-deductible goodwill ....................................... 2386
Example 29.9:
Depreciation of non-deductible PP&E ......................................... 2386
Example 29.10:
Amortisation of non-deductible loan issue costs ........................ 2387
Example 29.11:
Revaluation of non-deductible asset (1) ........................................ 2387
Example 29.12:
Revaluation of non-deductible asset (2) ....................................... 2387
Example 29.13:
Tax deduction for land ..................................................................... 2388
Example 29.14:
Tax-deductible goodwill .................................................................. 2388
Example 29.15:
Asset non-deductible at date of acquisition later becomes
deductible ............................................................................................ 2389
Example 29.16:
Partially deductible asset .................................................................. 2391
Example 29.17:
Super-deductible asset ..................................................................... 2392
Example 29.18:
Asset and liability giving rise to equal temporary
differences on initial recognition ................................................... 2395
Example 29.19:
Compound financial instrument ..................................................... 2400
Income
taxes
2341
Example 29.20:
Acquired subsidiary accounted for as asset purchase ................ 2400
Example 29.21:
Deductible temporary difference when the asset is valued
below cost ............................................................................................ 2406
Example 29.22:
Debt instruments measured at fair value ...................................... 2408
Example 29.23:
Temporary differences associated with subsidiaries,
branches, associates and joint arrangements ................................ 2415
Example 29.24:
Tax-transparent entity (consolidated) ........................................... 2420
Example 29.25:
Tax-transparent entity (equity-accounted) .................................. 2420
Example 29.26:
Measurement of deferred tax based on carrying amount
of asset ................................................................................................. 2425
Example 29.27:
Calculation of deferred tax depending on method of
realisation of asset ............................................................................. 2426
Example 29.28:
Dual-based asset ................................................................................ 2428
Example 29.29:
Convertible bond deductible if settled ........................................... 2431
Example 29.30:
Different tax rates applicable to retained and distributed
profits ................................................................................................... 2435
Example 29.31:
Elimination of intragroup profit (1) ................................................. 2437
Example 29.32:
Elimination of intragroup profit (2) ................................................. 2437
Example 29.33:
Intragroup transfer of goodwill ....................................................... 2438
Example 29.34:
Intragroup transfer of goodwill when tax base is retained
by transferor ....................................................................................... 2439
Example 29.35:
Multiple treatments, expected value method .............................. 2445
Example 29.36:
Treatment relates to deferred tax asset, most likely
amount is applied ............................................................................... 2445
Example 29.37:
Remeasurement of deferred tax liability recognised as the
result of retrospective application ................................................. 2452
Example 29.38:
Tax deductible distribution on equity instrument ...................... 2454
Example 29.39:
Tax on reclassified (‘recycled’) items ............................................. 2456
Example 29.40:
Debt instrument measured at fair value through other
comprehensive income .................................................................... 2458
Example 29.41:
Debt instrument measured at fair value through other
comprehensive income – tax effect .............................................. 2459
Example 29.42:
Tax effect of expected credit losses with no change in fair
value ..................................................................................................... 2460
Example 29.43:
L
oss in other comprehensive income and gain in profit or
loss offset for tax purposes ............................................................... 2461
Example 29.44:
Recognition of deferred tax asset in profit or loss on the
basis of tax liability accounted for outside profit or loss ............ 2461
Example 29.45:
Profit in continuing operations and loss in discontinued
operations offset for tax purposes ................................................. 2462
Example 29.46:
Taxable profit on disposal of discontinued operation
reduced by previously unrecognised tax losses .......................... 2462
2342 Chapter 29
Example 29.47:
Taxable profit on disposal of discontinued operation
reduced by previously recognised tax losses ............................... 2463
Example 29.48:
Tax deductions for defined benefit pension plans ..................... 2463
Example 29.49:
Tax deductions for share-based payment transactions –
allocation to profit or loss and equity ............................................ 2466
Example 29.50:
Tax deductions for share-based payment transactions –
‘multi-element’ awards ..................................................................... 2468
Example 29.51:
Tax deductions for share-based payment transactions –
more than one award ......................................................................... 2471
Example 29.52:
Tax deductions for share-based payment transactions –
staggered exercise of award ............................................................ 2472
Example 29.53:
Deferred tax on replacement share-based awards in a
business combination ........................................................................ 2475
Example 29.54:
Tax effect of a disposal of an interest in a subsidiary that
does not result in a loss of control .................................................. 2477
Example 29.55:
Apparent ‘day one’ impairment arising from recognition of
deferred tax in a business combination ........................................ 2485
Example 29.56:
Alternative presentations of tax reconciliation ............................ 2491
2343
Chapter 29
Income taxes