IAS 12 Income Tax
Statement of profit or loss and other comprehensive income
This amount comprises of
current & deferred & over/
under provision
OCI is after tax
(current or deferred)
Current Tax
Current tax is an estimate of the entity’s tax liability for the current period,
calculated according to existing tax legislation
Current tax is measured at an amount using tax rates (28%)
This liability is settled in the following period after deducting provisional tax
payments made during the year
Dr Income tax expense
Cr Income tax liability
Over/under provisions
If the amount settled with SARS differs from the amount recognised as a
liability in the previous year an over/under provision will arise
m
Over provision
Emm
Amount settled < amount previously recognised
numer
Under provision
Enverned
Amount settled > amount previously recognised
Disclose in INCOME TAX EXPENSE NOTE under current tax.
Will be a reconciling item in the tax reconciliation
, Current tax: Measurement and recognition
Amount of income tax payable on taxable profit for a period based on tax law
Ba
·
Deferred tax
Carrying amount - tax base = temporary differences
Exempt:
No - I
deferred *
Taxable: Deductible:
tax DTL DTA
·
Measurement:
Tax rate expected to apply when temporary differences reverse based on the
manner in which the CA is expected to be recovered or settled
Recognition:
Movement in deferred tax balance usually in P/L, but recognises tax consequence
where the item was recognised
Eg.P/L, OCI, Equity
What is deferred tax?
It is an accounting entry that arises on differences between the carrying amount
of assets and liabilities in the SFP as per IFRS and their Tax bases as per tax
legislation.
DT arises because:
Accounting profit ≠ Taxable income
DT eliminates the mismatch between accounting and taxable income profit
DT is provided on temporary differences on comprehensive basis using SFP approach
Statement of profit or loss and other comprehensive income
This amount comprises of
current & deferred & over/
under provision
OCI is after tax
(current or deferred)
Current Tax
Current tax is an estimate of the entity’s tax liability for the current period,
calculated according to existing tax legislation
Current tax is measured at an amount using tax rates (28%)
This liability is settled in the following period after deducting provisional tax
payments made during the year
Dr Income tax expense
Cr Income tax liability
Over/under provisions
If the amount settled with SARS differs from the amount recognised as a
liability in the previous year an over/under provision will arise
m
Over provision
Emm
Amount settled < amount previously recognised
numer
Under provision
Enverned
Amount settled > amount previously recognised
Disclose in INCOME TAX EXPENSE NOTE under current tax.
Will be a reconciling item in the tax reconciliation
, Current tax: Measurement and recognition
Amount of income tax payable on taxable profit for a period based on tax law
Ba
·
Deferred tax
Carrying amount - tax base = temporary differences
Exempt:
No - I
deferred *
Taxable: Deductible:
tax DTL DTA
·
Measurement:
Tax rate expected to apply when temporary differences reverse based on the
manner in which the CA is expected to be recovered or settled
Recognition:
Movement in deferred tax balance usually in P/L, but recognises tax consequence
where the item was recognised
Eg.P/L, OCI, Equity
What is deferred tax?
It is an accounting entry that arises on differences between the carrying amount
of assets and liabilities in the SFP as per IFRS and their Tax bases as per tax
legislation.
DT arises because:
Accounting profit ≠ Taxable income
DT eliminates the mismatch between accounting and taxable income profit
DT is provided on temporary differences on comprehensive basis using SFP approach
