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New Zealand debates income tax accounting under IFRS

  • New Zealand Image

02 Jul 2010

A recent tax law change in New Zealand has resulted in an intense debate in the country about how (the New Zealand equivalent) of IAS 12 Income Taxes should be applied, and impacts on reported profits.

The New Zealand government recently changed the tax law to deny tax deductions for certain buildings. New Zealand also does not have a capital gains tax, meaning affected buildings are outside the scope of the tax law altogether. The effect of the tax law change is resulting in many New Zealand companies recognising a deferred tax liability in respect of existing buildings, significantly impacting profits. The Accounting Standards Review Board (ASRB) and Financial Reporting Standards Board (FRSB) have jointly issued a communique discussing the changes and Deloitte (New Zealand) has published an alert discussing the changes and their accounting implications. The IASB is currently undertaking a limited scope project on IAS 12 and has tentatively decided to consider a related issue of the treatment of revalued buildings. Click for:

 

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