Content of IFRC 23

Scope

The interpretation is to be applied to the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under IAS 12.

Issues and consensus

Whether tax treatments should be considered collectively

An entity is required to use judgement to determine whether each tax treatment should be considered independently or whether some tax treatments should be considered together. The decision should be based on which approach provides better predictions of the resolution of the uncertainty.

Assumptions for taxation authorities' examinations

An entity is to assume that a taxation authority with the right to examine any amounts reported to it will examine those amounts and will have full knowledge of all relevant information when doing so.

Determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates

An entity has to consider whether it is probable that the relevant authority will accept each tax treatment, or group of tax treatments, that it used or plans to use in its income tax filing.

• If the entity concludes that it is probable that a particular tax treatment is accepted, the entity has to determine taxable profit (tax loss), tax bases, unused tax losses, unused tax credits or tax rates consistently with the tax treatment included in its income tax filings.
• If the entity concludes that it is not probable that a particular tax treatment is accepted, the entity has to use the most likely amount or the expected value of the tax treatment when determining taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates. The decision should be based on which method provides better predictions of the resolution of the uncertainty.

Effect of changes in facts and circumstances

An entity has to reassess its judgments and estimates if facts and circumstances change.

Disclosures

The interpretation does not contain any new disclosure requirements. Instead it highlights existing disclosure requirements in IAS 1 and IAS 12.

Effective date and transition

An entity applies IFRIC 23 for annual reporting periods beginning on or after January 1, 2019. Earlier application is permitted.

The requirements are applied by recognizing the cumulative effect of initially applying them in retained earnings, or in other appropriate components of equity, at the start of the reporting period in which an entity first applies them, without adjusting comparative information. Full retrospective application is permitted, if an entity can do so without using hindsight.

Review the press release on the IASB's website.

The new convention will also strengthen provisions to resolve treaty disputes, including through mandatory binding arbitration, thereby reducing double taxation and increasing tax certainty.

The first modifications to bilateral tax treaties are expected to enter into effect in early 2018.

Review the press release and the convention on the OECD's website.

Financial statement preparers told FASB that they had difficulties applying hedge accounting and that their risk management techniques are not aligned with the accounting under the current standard.

FASB Chairman Russell Golden said in a news release that the new standard will create better alignment between companies’ risk management activities and the accounting rules. The standard will better reflect the economic results of hedging in the financial statements and will simplify hedge accounting treatment.

After FASB approves the standard on the written ballot, it is expected to be issued in mid-August.

Review the press release on the Journal of Accountancy's website.

IFAC member organizations can utilize this policy in their own context to help communicate integrated reporting key messages with regulators and others, as well as encourage alignment of integrated reporting to current requirements for annual reporting.

Review the press release and policy position on the IFAC's website.

Regarding older content, it notes:

Because we store thousands of documents on our current server, we are migrating content to the new website in phases. Content yet to be migrated will remain in an archive of the current website, which will be available to access via archive.ifrs.org.

Review the press release on the IASB's website for the changes being made to its website.

The responses to ED/2017/3 seem to fall into three major categories:

• Those who believe that there never was an issue with IFRS 9;
• Those who believe that changes to IFRS 9 are needed, but the approach is wrong/might have unintended consequences; and
• Those who believe that changes to IFRS 9 might be warranted, but the timing is wrong.

The IASB is in the process of posting all responses to the exposure draft to its website.

Review the comment letters on the IASB's website.

So far, four broad areas have been identified where IFRS 13 might benefit from improvements. These four areas are the backbone of the RFI:

• Disclosures about fair value measurements. Some of the disclosure requirements for Level 3 fair value measurements are perceived as onerous while at the same time their usefulness is questioned.
• Prioritising Level 1 inputs or the unit of account. IFRS 13 is perceived as not clear on whether entities should prioritise Level 1 inputs or the unit of account when determining the fair value of investments in joint ventures and associates.
• Application of the concept of the highest and best use. Concerns in this area regard the implications of applying the concept of highest and best use in the measurement of groups of operating assets.
• Application of judgement in specific areas. Challenges around this have been mentioned to the IASB and the question is whether further support could be helpful.

Also, the RFI asks respondents whether the IASB should strive to maintain convergence with US GAAP Topic 820 Fair Value Measurement in any changes that might be the result of the PIR.

Comment deadline is September 22, 2017.

Review the press release and request for information on the IASB's website.

The <IR> framework has become widely adopted and the UK’s guidance on the concept of a strategic report is seen as mainstream. In Hans Hoogervorst’s words: "They put more emphasis on interconnectivity among elements of an integrated report’" They look at "how developments in the external environment have affected a company’s business model and strategy’" he said. It is time for change. Now more than ever people need integrated reporting-style reporting.

Read the entire column on our Global IAS Plus site.

These requirements will apply to oil and gas facilities that are responsible for the extraction, production, processing, and transportation of crude oil and natural gas. This includes oil and gas wells and batteries, natural gas processing plants, compressor stations, and supporting pipelines.

Review the press release and the proposed regulations on the Government of Canada's website.

Also, a summary of the proposed regulations is available on the Norton Rose Fulbright's website.