Deferred tax
Deferred tax concerns future tax effects of temporary differences between carrying amounts and tax bases and certain unused tax losses or credits. Recognition and measurement are subject to IAS 12 requirements and exceptions. Auditors assess the underlying differences, applicable rates, recoverability and disclosures in context.
Worked example
An asset has a carrying amount of 100 and a tax base of 60; at an applicable 25% tax rate, a taxable temporary difference of 40 gives a deferred tax liability of 10, subject to exceptions.
Common mistake
A temporary difference is not the same as a permanent difference, and a deferred tax asset is not recognised without considering recoverability.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | AAA (INT) | Supporting | September 2026–June 2027 |
| ACCA | FR | Direct | September 2026–June 2027 |
| ACCA | SBR | Direct | September 2026–June 2027 |