We comment on the proposed amendments regarding the recognition of deferred tax assets for unrealised losses

  • Deloitte comment letter on IASB ED/2014/3 'Recognition of Deferred Tax Assets for Unrealised Losses' Image

15 Dec 2014

We have published our comment letter on the International Accounting Standards Board’s (IASB) Exposure Draft ED/2014/3 'Recognition of Deferred Tax Assets for Unrealised Losses'.

The IASB's proposed amendments aim at clarifying the following aspects:

  • Unrealised losses on debt instruments measured at fair value and measured at cost for tax purposes give rise to a deductible temporary difference regardless of whether the debt instrument's holder expects to recover the carrying amount of the debt instrument by sale or by use.
  • The carrying amount of an asset does not limit the estimation of probable future taxable profits.
  • Estimates for future taxable profits exclude tax deductions resulting from the reversal of deductible temporary differences.
  • An entity assesses a deferred tax asset in combination with other deferred tax assets. Where tax law restricts the utilisation of tax losses, an entity would assess a deferred tax asset in combination with other deferred tax assets of the same type.

In general, we agree with the proposed amendments; however, we suggest some enhancements to the wording to better clarify the proposals.

Click for the full comment letter.       

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.