IASB Deliberates Limited Project on Income Taxes

Published on: 20 Jul 2010

Today, the IASB continued deliberations of its limited-scope project to amend IAS 12, Income Taxes. See Deloitte’s March 18, 2010, Accounting Journal entry for further details on the project’s scope and timing.

Today’s discussion focused on the timing of the topics to be addressed in this project and practice issues associated with the deferred tax accounting for (1) investment properties measured at fair value under IAS 40, Investment Properties; (2) assets measured at fair value in accordance with the revaluation models in IAS 16, Property, Plant and Equipment, and IAS 38, Intangible Assets; and (3) investment property; property, plant, and equipment; and intangible assets measured at fair value that are acquired in a business combination. The IASB agreed that when an entity does not expect a decrease in the value of property before it sells the asset, deferred taxes for this asset would be measured on the basis of tax consequences that would follow from recovery of the carrying amount of the asset through sale.

The IASB agreed that this issue will be brought as a separate exposure draft. Other issues within the project’s scope will be discussed at a later date, as outlined in the appendix to the meeting materials. Specifically, uncertain tax positions will be discussed after the Board reaches a consensus on revisions to IAS 37, Provisions, Contingent Liabilities and Contingent Assets.

Appendix — Timetable

July 2010 Remeasurement of investment property at fair value.
September 2010

Tax effect of dividends by specific entities, such as real estate investment trusts.

Other proposals in the March 2009 exposure draft that attracted general support.

October 2010 Uncertain tax positions.
November 2010 Preballot draft and, if needed, second preballot draft.
December 2010 Ballot and publication.
January to April 2011 Comment period.
May 2011 Consider comments received on the exposure draft.
June 2011 Finalize the limited amendments to IAS 12.

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