IAS 12 — Threshold of recognition of an asset on uncertain tax position

Date recorded:

The IFRS IC received a submission asking for guidance on whether an asset should be recognised when an entity has paid cash to the tax authority but expects to recover some or all of that cash.

In the fact pattern provided, the staff believes that an asset is recognised if the amount of cash paid (which is a certain amount) exceeds the amount of tax expected to be paid (which is an uncertain amount). Therefore, the staff recommends not to add the issue to the agenda, as the accounting requirements are clear enough.

One Committee member pointed out that there is insufficient guidance on uncertain tax positions but said that this fact pattern is definitely within the scope of IAS 12. Therefore the asset or liability shall be measured at the amount expected to be paid out to or recovered from the tax authorities.

The Committee agreed with the staff recommendation but asked to amend the wording of the tentative agenda decision. The current version points out several deficiencies of IAS 12 and the Committee thinks it would be unwise to include them.

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