Yesterday, the IASB issued an amendment to IAS 12, Income Taxes. The amendment permits entities to measure deferred taxes associated with an asset on the basis of a presumption that recovery of the carrying amount will normally be through sale of the asset. Currently, IAS 12 indicates that the measurement of a deferred tax asset or liability should reflect the “tax consequences that would follow from the manner in which the entity expects to recover or settle the carrying amount of its assets and liabilities.”

The exception created by the amendment requires a rebuttable presumption that certain types of assets and liabilities will be recovered via sale and that the related deferred tax asset or liability should be measured in accordance with that premise (e.g., capital gains rates would be applied if sale would result in a capital gain). The exception will apply only to investment assets measured by using the fair value method under IAS 40, Investment Property (the original exposure draft also included (1) property, plant, and equipment and (2) intangible assets), and must be rebutted if the underlying asset is held by an entity for which the business model objective is to recover the asset’s economic benefits throughout its useful life. The amendment will be effective beginning in 2012 and will be applied retroactively.