DEFERRED TAXES

Deferred Tax
• Deferred tax is an income tax payable
(recoverable) in respect of the taxable profit
(tax loss) for future periods as a result of past
transactions or events. It has two categories:
the deferred tax asset and deferred tax liability.
 Deferred Taxes: Comparison of Standards
PFRS for SMEs PFRS for SEs Full PFRS
Definition

Deferred tax liabilities The amounts of income tax payable in future periods in respect of taxable
temporary differences.

The amounts of income tax recoverable in future in respect of deductible (a)

Deferred tax assets temporary differences, (b) the carry forward of unused tax losses and (c) the
carry forward of unused tax credits.
 PFRS for SMEs PFRS for SEs Full PFRS
Temporary differences are differences between Same as PFRS for Same
Temporary the tax basis of an asset or liability and its SMEs
differences carrying amount in the financial statements that
will result in a taxable or deductible amount
when the carrying amount of the asset or liability
is recovered or settled.
A valuation allowance is recognized so that the Same as PFRS for A deferred tax asset is only
net carrying amount of the deferred tax asset SMEs recognized to the extent that
equals the highest amount that is more likely it is probable that there will
Recognition than not to be recovered. The net carrying be sufficient future taxable
amount of deferred tax asset is likely to be the profit to enable recovery of
same between full IFRS and IFRS for SMEs. the deferred tax asset.
The concept of valuation
allowance is not applicable.
 PFRS for SMEs PFRS for SEs Full PFRS

Deferred taxes are Same as PFRS for SMEs Same as PFRS for
measured using tax rates SMEs and SEs
(and tax laws) that apply or
Measurement have been enacted by the
reporting date.

Deferred tax assets and

liabilities are not
discounted.
 PFRS for SMEs PFRS for SEs Full PFRS

The tax basis of an asset equals the
amount that would have been
deductible in arriving at taxable profit if
the carrying amount of the asset has
Tax basis been recovered through sales at the
end of the reporting period.
Same as the PFRS for SMEs. The tax basis of an asset
or liability is determined
based on the expected
manner of recovery or
settlement.

The tax basis of a liability equals its

carrying amount less any amounts
deductible in determining taxable profit
(or plus any amounts included in
taxable profit) if the liability had been
settled at the end of the reporting
period.
 PFRS for SMEs
Management offsets
deferred tax assets and
liabilities , only when it has
Offsetting a legally enforceable right to
set off the amounts and it
intends either to settle on a
net basis or to realize the
asset and settle the liability
simultaneously.
PFRS for SEs Full PFRS
Same as PFRS Set off the assets and liabilities of
for SMEs the same taxable entity if and only if
they relate to income tax levied by
the same authority and the entity
has a legal enforceable right to set
off current tax assets against
liabilities.
 PFRS for SMEs PFRS for SEs Full PFRS

An entity shall disclose the following separately:

a) an explanation of the significant differences in amounts presented in the statement of
income and amounts reported to tax authorities;
Disclosure b) an explanation of changes in the applicable tax rate(s) compared with the previous
reporting period; and
c) for each type of temporary difference and for each type of unused tax losses and tax
credits:
i. the amount of deferred tax assets and liabilities at the end of the reporting period;
ii. an analysis of the change in deferred tax assets and liabilities during the period; and
iii. The amount and expiry dates of unused tax losses and unused tax credits.
Thank you!