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Hi Sir,
I’m having some doubts about Tax Base(liability)
Lets say a provision for 40,000 will be needed in the future. The provision is deductable on cash basis when it is paid.
Why will its Tax base be zero? In a logical way i understand that it will be zero so that its temporary difference will be needed to calculate deferred tax but In the “Tax base definition itself” i cannot see the link.
If you accept (as you must!) that the tax base of a liability is as defined … “The tax base of a liability is its carrying amount, less any amount that will be deductible for tax purposes in respect of that liability in future periods” … then maybe you can now see that the tax base of a provision that will be fully allowable for tax purposes in the future should be zero
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