Deferred tax Flashcards
(14 cards)
Accounting profit
profit or loss for the period before deducting tax expense
Taxable profit
Profit or loss for the period determine in accordance with rules established by the taxation authorities upon which income taxes are payable
Tax expense
The aggerate amount included in the determination of P/L for the period in respect of current tax & deferred tax
Current tax
Amount of income taxes payable in respect of taxable profit/ (tax loss) for the period
Deferred tax
When income / expenses (or A/L) are treated differently under IFRS legislation and where these differences will reverse
deferred tax asset
The amount of taxes recoverable in future periods in respect of:
- Deductible temporary differences
- Unused tax loses carried forward
-Unused tax credits carried forward
Deferred tax liabilities
The income taxes payable in the future periods in respect of taxable temporary differences.
- Reflects the belief that the tax has been incurred but not charged by SARS
Recognition
- Deferred tax adjustments are recognised in Profit or Loss, Other comprehensive income or Equity
- Depending on where the transaction or event was recognized
Measurement Methods
- Balance sheet
- Income sheet
Tax base
Amount that will be deductible for tax purposes against any taxable economic benefit that will flow to the entity when it recovers the value of the asset
( Wear & Tear)
Temporary differences
The difference between an asset’s or a liability’s carrying amount in the SOFP & tax base
Taxable temporary differences
Those that will result in taxable amounts in determining taxable profits of future periods when the carrying amount of the asset or liability is recovered or settled
(Leads to DTL)
Deductible temporary differences
Those that will result in amounts that are deductible in determining taxable profits of future periods when the carrying amount of the asset or liability is recovered or settled
( Leads to DTA)
Income received in advance
TB = CA less portion that won’t be taxable in future
