Taxable temporary difference
Recognise a deferred tax liability for taxable temporary differences unless an IAS 12 exception applies. Measure it using the expected tax rate enacted or substantively enacted by the reporting date. For a simple depreciable asset, a carrying amount greater than its tax base commonly creates a taxable difference; liability analysis can work in the opposite direction and must follow the tax consequences of settlement.
Worked example
An asset’s carrying amount is $120,000 and its tax base is $80,000. The taxable temporary difference is $40,000; at 25% the deferred tax liability is $10,000, assuming no exception applies.
Common mistake
Calling the $40,000 difference the tax liability without applying the tax rate, or assuming the same carrying-amount direction applies to assets and liabilities.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FR | Direct | September 2026–June 2027 |
| ACCA | SBR | Direct | September 2026–June 2027 |