IFRIC 23 — Uncertainty over Income Tax Treatments
Effective date: |
Effective for annual reporting periods beginning on or after January 1, 2019. Earlier application is permitted. |
Published by the IASB: |
June 7, 2017 |
Included in Part I of CPA Canada Handbook: |
September 2017 |
Overview
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 judgements 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 1 January 2019. Earlier application is permitted. The requirements are applied by recognising 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.
History of IFRIC 23
The following table shows the history of this standard subsequent to the adoption of IFRS in Canada.
Date1 |
Development |
Comments |
Included in Part I of the CPA Canada Handbook2 |
June 7, 2017 |
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. IFRIC 23 is effective for annual reporting periods beginning on or after January 1, 2019. Earlier application is permitted. |
September 2017 |
Notes
- For further details of relevant developments prior to this, please refer to our Deloitte Global section.
- Newly issued, amended or revised IFRSs are part of Canadian GAAP only after they are approved by the Accounting Standards Board in accordance with its due process.
The above summary does not include details of consequential amendments made as the result of other projects.
Related Standards
Amendments under consideration
- None