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Would it be correct to say that classifying a financial asset at FVTOCI is more tax efficient than classifying it at FVTPL? Indeed, the revaluation initially made through OCI would not be taxed, would they? I know this is a bit out of topic, but I could not help but asking this question.
Thank you very much,
The tax efficiency will depend on the tax rules in the tax jurisdiction. I’m no tax expert, but I think that any gains/losses in profit or loss are not taxed until the investment is disposed and there is then a capital gain/loss, hence the financial reporting treatment is irrelevant. If it is FVTPL or FVTOCI then the tax treatment is the same, a capital gain/loss arises on disposal, and so one is no more tax efficient than the other I believe.
Good to see you thinking it through though and linking it to other subjects. Good work!