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EFRAG draft comment letter on the proposed amendments regarding the recognition of deferred tax assets for unrealised losses

  • EFRAG (European Financial Reporting Advisory Group) (dk green) Image

12 Sep 2014

The European Financial Reporting Advisory Group (EFRAG) has issued a draft comment letter on the amendments to IAS 12 'Income Taxes' that the IASB proposed in response to diversity in practice and that are relevant in circumstances in which the entity reports tax losses.

As the IASB concluded that diversity in practice around the recognition of a deferred tax asset that is related to a debt instrument measured at fair value is mainly attributable to uncertainty about the application of some of the principles in IAS 12, the proposed amendments consist of some clarifying paragraphs and an illustrating example.

EFRAG in its draft comment letter agrees with most of the proposals but has some concerns or wording suggestions as EFRAG believes that some of the amendments are difficult to read or would need further clarification. In relation to the new paragraph 29A the IASB proposes to add, EFRAG explicitly asks constituents for their view (should EFRAG agree or disagree) and presents two alternative answers as EFRAG is aware that there are significant different views on the issue.

Comments on the draft comment letter are due by 28 November 2014. It is available on the EFRAG website.

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