IAS 37 — Deposits relating to taxes other than income tax

Date recorded:

IAS 37 Provisions, Contingent Liabilities and Contingent Assets — Deposits relating to taxes other than income tax (Agenda Paper 2)


In March 2018 the Committee discussed a submission on the application of IAS 37 in relation to payments relating to uncertain tax treatments that are outside the scope of IAS 12 Income Taxes (i.e. the payments are for taxes other than income tax). The fact pattern described an entity making a voluntarily payment equal to the disputed amount to the tax authority in order to avoid possible penalties or interest. The Committee discussed the matter again in September 2018.

On making the payment, the entity has the right to receive future economic benefits either in a form of cash or by using the payment to settle the tax liability. The Committee agreed with the staff analysis that the payment made by the entity meets the definition of an asset based on the application of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors and the definitions in the Conceptual Framework (including the 2018 Conceptual Framework).

The Committee agreed that the entity's management may refer to IFRS Standards (IAS 8 and Conceptual Framework) for assistance in developing policies for recognising, measuring and presenting that asset and disclosing information about it.

In its September 2018 meeting, the Committee agreed not to add this matter to its standard-setting agenda and instead adopt the proposed wording in the tentative agenda decision subject to the changes as discussed in the meeting (including changing the term "payments" in the heading to "deposits" in order to reflect the fact that the amounts paid are eligible for a refund in the future).

Comment letters received agreed with the Committee's conclusion that the entity has an asset when it makes the tax deposit to the tax authority. One respondent considered an Interpretation or amendment to the Standard is necessary to clarify the accounting for these transactions to eliminate the diversity in practice, but the staff analyse that the existing IFRS Standards provide an adequate basis for accounting and hence do not recommend to add this matter to the Committee’s standard-setting agenda. Another respondent considered the reference to IAS 8 is not appropriate because only IAS 1:15 refers to the asset definition in the Conceptual Framework, but the staff analyse that IAS 1 Presentation of Financial Statements does not override IAS 8 and hence suggest no change be made to the tentative agenda decision.

Staff recommendation

The staff recommended finalising the agenda decision as published in IFRIC Update in September 2018 with minor editorial changes.


Some Committee members suggested adding in the agenda decision that the entity has no ability to demand the deposit back prior to resolution of the contingency, in order to avoid confusion on whether the tax deposits would be in scope of IFRS 9 Financial Instruments. There were mixed views on the use of the term "deposits" and "payments" as some Committee members considered both terms are basically the same while some considered the term "payment" includes the meaning of deposit and payments on account, which is much broader.

The Committee decided, by a majority vote, to finalise the agenda decision.

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