Current tax
Calculate the amount using tax rates and laws enacted or substantively enacted by the reporting date. Recognise a current tax liability to the extent unpaid; a tax overpayment is an asset. Include eligible adjustments relating to prior periods and present the tax expense in the appropriate location under IAS 12. Current tax differs from deferred tax, which reflects future consequences of temporary differences and certain unused losses.
Worked example
Taxable profit for the year is $200,000 and the applicable tax rate is 25%. Current tax expense is $50,000 before prior-year adjustments; if $40,000 has already been paid, $10,000 remains payable.
Common mistake
Applying the tax rate directly to accounting profit without tax adjustments, or including sales tax automatically within IAS 12 current income tax.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FR | Direct | September 2026–June 2027 |
| ACCA | SBR | Direct | September 2026–June 2027 |