IAS 12 Income Taxes
Current tax is the amount payable or recoverable for taxable profit or loss; deferred tax addresses future tax effects of temporary differences and certain unused losses or credits. Compare carrying amounts with tax bases, apply the recognition conditions and exceptions, and use the relevant enacted or substantively enacted tax rate. Present tax consistently with the underlying transaction, including OCI or equity where required. Exam scope may restrict which temporary differences must be calculated.
Worked example
An asset’s carrying amount is $100,000 and tax base $80,000. At 25%, the taxable temporary difference produces a $5,000 deferred tax liability, assuming no IAS 12 exception applies.
Common mistake
Applying IAS 12 deferred tax to a permanent tax difference or treating the full temporary difference as the tax balance.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FR | Direct | September 2026–June 2027 |
| ACCA | SBR | Direct | September 2026–June 2027 |