Temporary difference for development expenditure

The tax base of an asset is the amount that will be DEDUCTIBLE in the future. The tax base of a liability is the amount that will be taxable in the future. Development costs that are capitalised are an asset and these costs have already been deducted in determining the taxes. Hence none of the capitalised amounts are deductible anymore. So a nil tax base.

Hi, The explanation above is a bit too technical. Remember the way to think about the tax base is to think what the tax authorities would include in their SFP if they were preparing one. Given that the costs incurred have been fully allowable for tax purposes then they won't be capitalising them for any future tax deduction as they've already been written off. Hope that helps. Thanks