IAS 12 — Impact of an internal reorganisation on deferred tax amounts related to goodwill

Date recorded:

The IFRS IC received a request for guidance on the calculation of deferred tax as a consequence of an internal reorganisation of the entity. In the situation submitted, a business is transferred from a parent to a subsidiary but the goodwill is not transferred for tax reasons. The submitter asks how deferred tax assets and deferred tax liabilities should be calculated in the parent’s consolidated financial statements.

The staff recommends that the issue should not be added to the IFRS IC’s agenda as the guidance in the Standards is sufficiently clear.

One Committee member pointed out that if both entities operate in the same tax environment (i.e. same tax rate, same tax base), there would not be an accounting problem.

The Committee then discussed whether it was possible to transfer all but goodwill, however at one point it was decided to accept the fact and assume that the fact pattern is possible in some jurisdictions.

The Committee supports the staff view but suggests amending the tentative agenda decision to provide a clearer link between the reorganisation and the existence of tax assets and tax liabilities.

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