IAS 12
IAS 12
Income Taxes
In April 2001 the International Accounting Standards Board (the Board) adopted IAS 12
Income Taxes, which had originally been issued by the International Accounting Standards
Committee in October 1996. IAS 12 Income Taxes replaced parts of IAS 12 Accounting for Income
Taxes (issued in July 1979).
In December 2010 the Board amended IAS 12 to address an issue that arises when entities
apply the measurement principle in IAS 12 to temporary differences relating to investment
properties that are measured at fair value. That amendment also incorporated some
guidance from a related Interpretation (SIC-21 Income Taxes—Recovery of Revalued
Non-Depreciable Assets).
In January 2016 the Board issued Recognition of Deferred Tax Assets for Unrealised Losses
(Amendments to IAS 12) to clarify the requirements on recognition of deferred tax assets
related to debt instruments measured at fair value.
Other Standards have made minor consequential amendments to IAS 12. They include
IFRS 11 Joint Arrangements (issued May 2011), Presentation of Items of Other Comprehensive Income
(Amendments to IAS 1) (issued June 2011), Investment Entities (Amendments to IFRS 10,
IFRS 12 and IAS 27) (issued October 2012), IFRS 9 Financial Instruments (Hedge Accounting and
amendments to IFRS 9, IFRS 7 and IAS 39) (issued November 2013), IFRS 15 Revenue from
Contracts with Customers (issued May 2014), IFRS 9 Financial Instruments (issued July 2014) and
IFRS 16 Leases (issued January 2016).
姝 IFRS Foundation A855
,IAS 12
CONTENTS
from paragraph
INTERNATIONAL ACCOUNTING STANDARD 12
INCOME TAXES
OBJECTIVE
SCOPE 1
DEFINITIONS 5
Tax base 7
RECOGNITION OF CURRENT TAX LIABILITIES AND CURRENT TAX ASSETS 12
RECOGNITION OF DEFERRED TAX LIABILITIES AND DEFERRED TAX
ASSETS 15
Taxable temporary differences 15
Deductible temporary differences 24
Unused tax losses and unused tax credits 34
Reassessment of unrecognised deferred tax assets 37
Investments in subsidiaries, branches and associates and interests in joint
arrangements 38
MEASUREMENT 46
RECOGNITION OF CURRENT AND DEFERRED TAX 57
Items recognised in profit or loss 58
Items recognised outside profit or loss 61A
Deferred tax arising from a business combination 66
Current and deferred tax arising from share-based payment transactions 68A
PRESENTATION 71
Tax assets and tax liabilities 71
Tax expense 77
DISCLOSURE 79
EFFECTIVE DATE 89
WITHDRAWAL OF SIC-21 99
FOR THE ACCOMPANYING DOCUMENTS LISTED BELOW, SEE PART B OF THIS
EDITION
APPROVAL BY THE BOARD OF DEFERRED TAX: RECOVERY OF
UNDERLYING ASSETS (AMENDMENTS TO IAS 12) ISSUED IN DECEMBER
2010
APPROVAL BY THE BOARD OF RECOGNITION OF DEFERRED TAX ASSETS
FOR UNREALISED LOSSES (AMENDMENTS TO IAS 12) ISSUED IN JANUARY
2016
BASIS FOR CONCLUSIONS
ILLUSTRATIVE EXAMPLES
A856 姝 IFRS Foundation
, IAS 12
International Accounting Standard 12 Income Taxes (IAS 12) is set out in paragraphs 1–99.
All the paragraphs have equal authority but retain the IASC format of the Standard
when it was adopted by the IASB. IAS 12 should be read in the context of its objective
and the Basis for Conclusions, the Preface to International Financial Reporting Standards and
the Conceptual Framework for Financial Reporting. IAS 8 Accounting Policies, Changes in
Accounting Estimates and Errors provides a basis for selecting and applying accounting
policies in the absence of explicit guidance.
姝 IFRS Foundation A857
, IAS 12
International Accounting Standard 12
Income Taxes
Objective
The objective of this Standard is to prescribe the accounting treatment for
income taxes. The principal issue in accounting for income taxes is how to
account for the current and future tax consequences of:
(a) the future recovery (settlement) of the carrying amount of assets
(liabilities) that are recognised in an entity’s statement of financial
position; and
(b) transactions and other events of the current period that are recognised
in an entity’s financial statements.
It is inherent in the recognition of an asset or liability that the reporting entity
expects to recover or settle the carrying amount of that asset or liability. If it is
probable that recovery or settlement of that carrying amount will make future
tax payments larger (smaller) than they would be if such recovery or settlement
were to have no tax consequences, this Standard requires an entity to recognise
a deferred tax liability (deferred tax asset), with certain limited exceptions.
This Standard requires an entity to account for the tax consequences of
transactions and other events in the same way that it accounts for the
transactions and other events themselves. Thus, for transactions and other
events recognised in profit or loss, any related tax effects are also recognised in
profit or loss. For transactions and other events recognised outside profit or loss
(either in other comprehensive income or directly in equity), any related tax
effects are also recognised outside profit or loss (either in other comprehensive
income or directly in equity, respectively). Similarly, the recognition of deferred
tax assets and liabilities in a business combination affects the amount of
goodwill arising in that business combination or the amount of the bargain
purchase gain recognised
This Standard also deals with the recognition of deferred tax assets arising from
unused tax losses or unused tax credits, the presentation of income taxes in the
financial statements and the disclosure of information relating to income taxes.
Scope
1 This Standard shall be applied in accounting for income taxes.
2 For the purposes of this Standard, income taxes include all domestic and foreign
taxes which are based on taxable profits. Income taxes also include taxes, such
as withholding taxes, which are payable by a subsidiary, associate or joint
arrangement on distributions to the reporting entity.
3 [Deleted]
4 This Standard does not deal with the methods of accounting for government
grants (see IAS 20 Accounting for Government Grants and Disclosure of Government
A858 姝 IFRS Foundation
IAS 12
Income Taxes
In April 2001 the International Accounting Standards Board (the Board) adopted IAS 12
Income Taxes, which had originally been issued by the International Accounting Standards
Committee in October 1996. IAS 12 Income Taxes replaced parts of IAS 12 Accounting for Income
Taxes (issued in July 1979).
In December 2010 the Board amended IAS 12 to address an issue that arises when entities
apply the measurement principle in IAS 12 to temporary differences relating to investment
properties that are measured at fair value. That amendment also incorporated some
guidance from a related Interpretation (SIC-21 Income Taxes—Recovery of Revalued
Non-Depreciable Assets).
In January 2016 the Board issued Recognition of Deferred Tax Assets for Unrealised Losses
(Amendments to IAS 12) to clarify the requirements on recognition of deferred tax assets
related to debt instruments measured at fair value.
Other Standards have made minor consequential amendments to IAS 12. They include
IFRS 11 Joint Arrangements (issued May 2011), Presentation of Items of Other Comprehensive Income
(Amendments to IAS 1) (issued June 2011), Investment Entities (Amendments to IFRS 10,
IFRS 12 and IAS 27) (issued October 2012), IFRS 9 Financial Instruments (Hedge Accounting and
amendments to IFRS 9, IFRS 7 and IAS 39) (issued November 2013), IFRS 15 Revenue from
Contracts with Customers (issued May 2014), IFRS 9 Financial Instruments (issued July 2014) and
IFRS 16 Leases (issued January 2016).
姝 IFRS Foundation A855
,IAS 12
CONTENTS
from paragraph
INTERNATIONAL ACCOUNTING STANDARD 12
INCOME TAXES
OBJECTIVE
SCOPE 1
DEFINITIONS 5
Tax base 7
RECOGNITION OF CURRENT TAX LIABILITIES AND CURRENT TAX ASSETS 12
RECOGNITION OF DEFERRED TAX LIABILITIES AND DEFERRED TAX
ASSETS 15
Taxable temporary differences 15
Deductible temporary differences 24
Unused tax losses and unused tax credits 34
Reassessment of unrecognised deferred tax assets 37
Investments in subsidiaries, branches and associates and interests in joint
arrangements 38
MEASUREMENT 46
RECOGNITION OF CURRENT AND DEFERRED TAX 57
Items recognised in profit or loss 58
Items recognised outside profit or loss 61A
Deferred tax arising from a business combination 66
Current and deferred tax arising from share-based payment transactions 68A
PRESENTATION 71
Tax assets and tax liabilities 71
Tax expense 77
DISCLOSURE 79
EFFECTIVE DATE 89
WITHDRAWAL OF SIC-21 99
FOR THE ACCOMPANYING DOCUMENTS LISTED BELOW, SEE PART B OF THIS
EDITION
APPROVAL BY THE BOARD OF DEFERRED TAX: RECOVERY OF
UNDERLYING ASSETS (AMENDMENTS TO IAS 12) ISSUED IN DECEMBER
2010
APPROVAL BY THE BOARD OF RECOGNITION OF DEFERRED TAX ASSETS
FOR UNREALISED LOSSES (AMENDMENTS TO IAS 12) ISSUED IN JANUARY
2016
BASIS FOR CONCLUSIONS
ILLUSTRATIVE EXAMPLES
A856 姝 IFRS Foundation
, IAS 12
International Accounting Standard 12 Income Taxes (IAS 12) is set out in paragraphs 1–99.
All the paragraphs have equal authority but retain the IASC format of the Standard
when it was adopted by the IASB. IAS 12 should be read in the context of its objective
and the Basis for Conclusions, the Preface to International Financial Reporting Standards and
the Conceptual Framework for Financial Reporting. IAS 8 Accounting Policies, Changes in
Accounting Estimates and Errors provides a basis for selecting and applying accounting
policies in the absence of explicit guidance.
姝 IFRS Foundation A857
, IAS 12
International Accounting Standard 12
Income Taxes
Objective
The objective of this Standard is to prescribe the accounting treatment for
income taxes. The principal issue in accounting for income taxes is how to
account for the current and future tax consequences of:
(a) the future recovery (settlement) of the carrying amount of assets
(liabilities) that are recognised in an entity’s statement of financial
position; and
(b) transactions and other events of the current period that are recognised
in an entity’s financial statements.
It is inherent in the recognition of an asset or liability that the reporting entity
expects to recover or settle the carrying amount of that asset or liability. If it is
probable that recovery or settlement of that carrying amount will make future
tax payments larger (smaller) than they would be if such recovery or settlement
were to have no tax consequences, this Standard requires an entity to recognise
a deferred tax liability (deferred tax asset), with certain limited exceptions.
This Standard requires an entity to account for the tax consequences of
transactions and other events in the same way that it accounts for the
transactions and other events themselves. Thus, for transactions and other
events recognised in profit or loss, any related tax effects are also recognised in
profit or loss. For transactions and other events recognised outside profit or loss
(either in other comprehensive income or directly in equity), any related tax
effects are also recognised outside profit or loss (either in other comprehensive
income or directly in equity, respectively). Similarly, the recognition of deferred
tax assets and liabilities in a business combination affects the amount of
goodwill arising in that business combination or the amount of the bargain
purchase gain recognised
This Standard also deals with the recognition of deferred tax assets arising from
unused tax losses or unused tax credits, the presentation of income taxes in the
financial statements and the disclosure of information relating to income taxes.
Scope
1 This Standard shall be applied in accounting for income taxes.
2 For the purposes of this Standard, income taxes include all domestic and foreign
taxes which are based on taxable profits. Income taxes also include taxes, such
as withholding taxes, which are payable by a subsidiary, associate or joint
arrangement on distributions to the reporting entity.
3 [Deleted]
4 This Standard does not deal with the methods of accounting for government
grants (see IAS 20 Accounting for Government Grants and Disclosure of Government
A858 姝 IFRS Foundation
