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IAS 12 — Deferred tax related to assets and liabilities arising from a single transaction

 

Background

The IFRS Interpretations Committee received a submission about IAS 12 Income Taxes and the recognition of deferred tax in relation to leases (when a lessee recognises an asset and a liability at the lease commencement) and decommissioning obligations (when an entity recognises a liability and includes the decommissioning costs in the cost of the item of of property, plant and equipment). The submitted fact pattern assumed that lease payments and decommissioning costs were deductible for tax purposes when paid and identified different approaches in practice.

The Committee discussed the submission at its meetings in March 2018 and June 2018 and came to the conclusion that the matter was relevant and widespread, as there are various kinds of contracts and fact patterns affected. Moreover, the question as to whether tax deductions are attributable to a contract, a (single) asset/liability, or rather to cash flows, and as to which consequences this may have for determining temporary differences, is fundamental within IAS 12. Therefore, the Committee recommended that the IASB develop clarifying amendments to IAS 12.

The IASB discussed the issue in October 2018 (general discussion of the issue and agreement with the IFRS Interpretations Committee's recommendation) and January 2019 (transition, retrospective application, and early application) and published an exposure draft of proposed clarifying amendments on 17 July 2019.

 

Current status of the project

The IASB first discussed this issue in October 2018. An exposure draft of proposed amendments was published on 17 July 2019 with comments requested by 14 November 2019.

 

Project milestones

Date Development Comments
October 2018 Issue first discussed by the IASB
17 July 2019 ED/2019/5 Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Proposed amendments to IAS 12) published Comments requested by 14 November 2019

 

Correction list for hyphenation

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