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IAS 12 — Proposed amendments to IAS 12

Date recorded:

The staff analyst presented the Agenda paper 3, Exposure Draft of proposed amendments to IAS12 (ED/2014/3)—Comment letter analysis- Recognition of Deferred Tax Assets for Unrealised Losses— Proposed amendments to IAS 12. She said that the amendment intended to provide guidance on the recognition of a deferred tax asset that was related to a debt instrument measured at fair value.  She said that the majority of respondents from the comments letters received were supportive of the amendment. She also said that the staff recommended proceeding with the amendments.

The majority of the Committee members indicated that the amendments had been improved and the comment letters were appropriately addressed.

One Committee member asked if it was appropriate to include an example in the body of the standard. Other members said that they would prefer to have a more compressed example.

One Committee member said that it would be necessary to add more clarification as to the meaning of “tax base equals cost” as it was not clear what the tax based was in that case, and specifically to clarify the meaning of “recovering an amount without tax consequences”.

The Implementation Director said that the Board preferred the example to be included in the body of the standard so that it was interpreted as a requirement. He said that he would go back to the Board with the concerns raised by the Committee and would further discuss about where to place the example.

Another Committee member asked in relation to the transition requirements. He said that the draft amendment indicated that the amendments should be applied retrospectively and an entity would not be required to restate opening retained earnings or other components of equity.  He said that some components of equity should be adjusted as opposed to P&L. The Implementation Director responded that it did not matter which component of equity was adjusted and it would be clarified in the wording.

One Committee member asked about the impact of recycling of OCI amounts in the income statement. He asked if the transition requirements meant that there would be no recycling. The Implementation Director responded that on transition an entity could have deferred tax assets that affected OCI and others that affected P&L items, so the relief was intended that there was no need to split between those two.

The Chairman then asked if there were any further comments on the questions as presented in the ED. There were no further comments.

He then asked if there were any objections to move forward with the amendments. No objections were raised.

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