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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

IFRIC 23, Uncertainty over Income Tax Treatments, is­sued

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

  1. For fur­ther de­tails of rel­e­vant de­vel­op­ments prior to this, please re­fer to our De­loitte Global sec­tion.
  2. 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

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.