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Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction – International Accounting Standards Board

Date recorded:

At its meeting on January 23, 2019, the International Accounting Standards Board (the Board) discussed the transition requirements and other particular aspects of the proposed amendments to IAS 12, Income Taxes, that Board members had raised at the October 2018 meeting. The proposed amendments would narrow the scope of the initial recognition exemption in paragraphs 15 and 24 of IAS 12. The exemption would no longer apply to the extent that, on the initial recognition of a transaction, an entity would recognize equal amounts of deferred tax assets and liabilities. The Board decided:

  1. to require entities to apply the proposed amendments retrospectively applying IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors. However, entities would be permitted to assess whether the requirements in IAS 12 to recognize deferred tax assets are met only at the date of transition (transition relief);
  2. to provide transition relief to first-time adopters, i.e., first-time adopters would be permitted to assess whether the requirements in IAS 12 to recognize deferred tax assets are met only at the date of transition to IFRSs; and
  3. to permit earlier application of the proposed amendments. All 14 Board members confirmed they are satisfied that the Board has complied with the applicable due process requirements and that it has undertaken sufficient consultation and analysis to begin balloting the proposed amendments to IAS 12. The Board plans to issue an exposure draft in the second quarter of 2019.

Review the IASB Update and podcast on the Board's Web site.

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