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Table of Contents
Intro
Cover
Title Page
Copyright Page
Foreword
Table of Contents
Chapter 1: Introduction to Tax Accounting
1.1. Introduction
1.2. Importance of accounting for income taxes
1.3. Primary tax accounting terminology
1.4. How are income taxes accounted for?
1.5. Other factors affecting tax reporting: Looking beyond the accounting requirements
1.5.1. Introduction
1.5.2. Fair share of taxes, non-financial reporting and pressure from investors
1.5.2.1. Publish What You Pay
1.5.2.2. Work by non-governmental organizations
1.5.2.3. The alphabet soup
1.5.2.4. The GRI standard on tax and payments to governments
1.5.2.5. The UN Principles for Responsible Investment
1.5.3. Regulatory industry, country-by-country and other reporting requirements
1.5.3.1. The Extractive Industries Transparency Initiative
1.5.3.2. US development in CbC reporting
1.5.3.2.1. Proposed update from FASB to income tax disclosures
1.5.3.2.2. International exchange of CbC reports
1.5.3.2.3. Recent developments in the United States
1.5.3.3. Relevant EU directives
1.5.3.3.1. EU Directives on Accounting and Transparency
1.5.3.3.2. EU Capital Requirements Directive
1.5.3.3.3. European Non-Financial Reporting Directive
1.5.3.3.4. European Directive on Mandatory Disclosure Rules (DAC6)
1.5.3.4. Transfer pricing documentation under the OECD Guidelines
1.5.4. Conclusion
1.6. International Financial Reporting Standards
1.6.1. Introduction
1.6.2. Why are International Financial Reporting Standards developed?
1.6.3. The convergence project
1.6.4. The structure of the IFRS Foundation
1.6.4.1. The Board
1.6.4.2. IFRS Foundation
1.6.4.3. IFRS Foundation trustees
1.6.4.4. IFRS Foundation monitoring board
1.6.4.5. IFRS advisory council
1.6.4.6. IFRS Interpretations Committee.
1.6.4.7. Accounting Standards Advisory Forum
1.6.5. Financial reporting standards
1.6.5.1. Introduction
1.6.5.2. The due process of IFRS
1.6.5.3. The due process of IFRIC interpretations
1.6.6. Conclusion
Chapter 2: Definition of Income Taxes
2.1. Introduction
2.2. Scope of IAS 12
2.3. Income taxes in the statements and analysis
2.4. Income taxes
2.5. Specific forms of taxation
2.5.1. Income tax
2.5.2. Withholding tax
2.5.3. Business tax
2.5.4. Tonnage tax
2.5.5. Mining tax
2.5.6. Interest payments and penalties
2.5.7. Alternative minimum taxes
2.5.8. Tax on value added
2.5.9. Taxes beyond the scope of IAS 12
2.5.10. Digital services taxes
2.6. Differences between IFRS and US GAAP
2.7. Developments with respect to COVID-19
Chapter 3: Book-to-Tax Differences: Permanent and Temporary
3.1. Introduction
3.2. Tax returns and reconciliation of financial statements
3.3. Adjustment of profit for tax purposes and the performance statements
3.4. Recovery of assets and settlement of liabilities
3.5. Impact of COVID-19 on IFRS reporting and deferred tax calculation
3.6. Frequently asked questions
Chapter 4: Current Tax and Prior Year Adjustments
4.1. Introduction
4.2. The process
4.3. Calculate current tax for the year
4.3.1. Calculate taxable income for the year
4.3.1.1. Recognition of current tax liabilities and current tax assets
4.3.2. Tax rates
4.3.3. Tax incentives
4.3.4. Uncertain tax positions
4.3.5. Tax loss carry-back claims
4.4. Calculate any prior year adjustments
4.4.1 Prior year adjustments
4.4.2. Change in accounting estimate vs. error
4.5. Reconcile tax accounts
4.5.1. Introduction
4.5.2. Balance sheet classification
4.5.3. Discounting
4.6. Conclusion
Chapter 5: Deferred Taxes
5.1. Introduction.
5.2. Origin of deferred tax assets
5.3. Overview of deferred tax assets and liabilities
5.3.1. Recognition
5.3.2. Measurement
5.3.3. Presentation
5.4. Practical approach to calculating deferred tax
5.5. Basic principles of carrying amount
5.6. Tax base as the basis for calculating deferred tax
5.6.1. Tax base of an asset
5.6.2. Tax base of a liability
5.6.3. Tax base of revenue received in advance
5.6.4. Uncertainty in determining the tax base
5.7. Tax base without a carrying amount
5.8. Calculate the temporary differences
5.8.1. Temporary difference
5.8.2. Taxable temporary differences
5.8.2.1. Assets
5.8.2.2. Liabilities
5.8.2.3. Other examples of taxable temporary differences
5.8.3. Deductible temporary differences
5.8.3.1. Assets
5.8.3.2. Liabilities
5.8.3.3. Other examples of deductible temporary differences
5.8.4. Other examples of temporary differences
5.9. Recognition criteria and initial recognition exemptions
5.9.1. Initial recognition exemption
5.9.2. Initial recognition of goodwill exempted from deferred tax
5.9.3. Exemption from recognizing outside basis deferred tax
5.9.4. Exemption from recognition of deferred tax assets
5.10. Manner of expected recovery
5.10.1. Substantively enacted tax rates
5.10.2. Tax rates based on manner of recovery
5.10.3. Recovery of investment property
5.10.4. Different tax rates for levels of taxable profit
5.11. Reconcile movements in deferred tax balances
5.11.1. Disclosure of deferred tax movements
5.11.2. Accounting for a deferred tax movement
5.11.2.1. Deferred tax movements in the income statement
5.11.2.2. Deferred tax movements in other comprehensive income
5.11.2.3. Deferred tax movements in equity
5.11.3. Disallowance of discounting
5.11.4. Deferred tax on capital losses.
5.12. Practical issues
5.12.1. Investment tax credits
5.12.2. Deferred tax on compound financial instruments
5.12.3. Divestments: Rollover relief
5.12.4. Intra-group transactions
5.12.5. Tax consideration during uncertain times (COVID-19)
Chapter 6: Deferred Tax Asset Recognition
6.1. Introduction
6.2. Deferred tax assets
6.2.1. Relevant deferred tax assets and GAAPs
6.2.2. Recognizing a deferred tax asset
6.3. Deferred tax assets on unused tax losses and credits
6.3.1. Background
6.3.2. The threshold: "Probable"
6.3.3. History of recent losses
6.3.4. Convincing other evidence
6.3.5. Specific tax regimes
6.4. Tax rate to be used
6.5. Discounting
6.6. Netting
6.7. The impact of the COVID-19 virus outbreak on the recognition of deferred tax assets as examples of non-recurrent events that still carry significant uncertainty to the future
6.8. Simplified checklist for deferred tax assets recognition
6.9. Frequently Asked Questions
Chapter 7: Tax Exposures
7.1. Introduction
7.2. Basic theory and technical guidance
7.2.1. Identification of uncertain tax treatments
7.2.1.1. What are uncertain tax treatments?
7.2.1.2. To consider uncertain tax treatments separately or together (determine unit of account)
7.2.2. Recognition
7.2.2.1. Evidence to support recognition
7.2.2.2. Detection risk
7.2.2.3. Tax opinions
7.2.2.4. Uncertainties related to valuation
7.2.2.5. Temporary differences
7.2.3. Measurement
7.2.3.1. Measurement under IFRS - Expected value method
7.2.3.2. Measurement under IFRS - Most likely amount method
7.2.3.3. Measurement under US GAAP
7.2.3.4. Examples of US GAAP and IFRS recognition and measurement
7.2.3.4.1. Example of transfer pricing-related uncertain tax position
7.2.3.4.2. Binary tax position.
7.2.4. Subsequent events
7.2.5. Effective settlement and statute of limitations
7.2.6. Interest and penalties
7.2.6.1. Accounting policy election under US GAAP
7.2.6.2. Judgement under IFRS
7.2.7. Presentation in the statement of financial position
7.2.8. Financial statements disclosures
7.3. Conclusion
Chapter 8: Disclosure Notes
8.1. Introduction
8.2. Presentation versus disclosure
8.3. Presentation and disclosure requirements IAS 12
8.3.1. Introduction
8.3.2. Presentation
8.3.2.1. Offsetting current taxes
8.3.2.2. Offsetting deferred taxes
8.3.2.3. Tax expense
8.3.2.4. Exchange differences on deferred foreign tax liabilities or assets
8.3.3. Disclosure
8.3.3.1. Total tax expense (income)
8.3.3.2. Effective tax rate reconciliation
8.3.3.3. Tax rates
8.3.3.4. Tax via equity and other comprehensive income
8.3.3.5. Overview of tax losses/non-recognized deferred tax assets
8.3.3.6. Investments in subsidiaries, branches and associates and interests in joint arrangements
8.3.3.7. Deferred taxes
8.3.3.8. Discontinued operations
8.3.3.9. Income tax consequences of dividends
8.3.3.10. Business combinations
8.3.3.11. Future taxable income
8.3.3.12. Tax contingencies and events after the reporting period
8.4. Non-IAS 12 presentation and disclosure requirements
8.4.1. Introduction
8.4.2. IAS 1: Presentation of financial statements
8.4.3. IAS 7: Statement of cash flows
8.4.4. IAS 10: Events after the reporting period
8.4.5. IFRS 3: Business Combinations
8.4.6. IFRS 8: Operating Segments
8.5. Conclusion
Chapter 9: Special Items
9.1. Introduction
9.2. Initial recognition
9.2.1. General rule of initial recognition
9.2.2. Mergers
9.2.3. Assets carried at fair value
9.2.4. Change in tax status of the entity.
9.2.5. Migration of an entity.
Cover
Title Page
Copyright Page
Foreword
Table of Contents
Chapter 1: Introduction to Tax Accounting
1.1. Introduction
1.2. Importance of accounting for income taxes
1.3. Primary tax accounting terminology
1.4. How are income taxes accounted for?
1.5. Other factors affecting tax reporting: Looking beyond the accounting requirements
1.5.1. Introduction
1.5.2. Fair share of taxes, non-financial reporting and pressure from investors
1.5.2.1. Publish What You Pay
1.5.2.2. Work by non-governmental organizations
1.5.2.3. The alphabet soup
1.5.2.4. The GRI standard on tax and payments to governments
1.5.2.5. The UN Principles for Responsible Investment
1.5.3. Regulatory industry, country-by-country and other reporting requirements
1.5.3.1. The Extractive Industries Transparency Initiative
1.5.3.2. US development in CbC reporting
1.5.3.2.1. Proposed update from FASB to income tax disclosures
1.5.3.2.2. International exchange of CbC reports
1.5.3.2.3. Recent developments in the United States
1.5.3.3. Relevant EU directives
1.5.3.3.1. EU Directives on Accounting and Transparency
1.5.3.3.2. EU Capital Requirements Directive
1.5.3.3.3. European Non-Financial Reporting Directive
1.5.3.3.4. European Directive on Mandatory Disclosure Rules (DAC6)
1.5.3.4. Transfer pricing documentation under the OECD Guidelines
1.5.4. Conclusion
1.6. International Financial Reporting Standards
1.6.1. Introduction
1.6.2. Why are International Financial Reporting Standards developed?
1.6.3. The convergence project
1.6.4. The structure of the IFRS Foundation
1.6.4.1. The Board
1.6.4.2. IFRS Foundation
1.6.4.3. IFRS Foundation trustees
1.6.4.4. IFRS Foundation monitoring board
1.6.4.5. IFRS advisory council
1.6.4.6. IFRS Interpretations Committee.
1.6.4.7. Accounting Standards Advisory Forum
1.6.5. Financial reporting standards
1.6.5.1. Introduction
1.6.5.2. The due process of IFRS
1.6.5.3. The due process of IFRIC interpretations
1.6.6. Conclusion
Chapter 2: Definition of Income Taxes
2.1. Introduction
2.2. Scope of IAS 12
2.3. Income taxes in the statements and analysis
2.4. Income taxes
2.5. Specific forms of taxation
2.5.1. Income tax
2.5.2. Withholding tax
2.5.3. Business tax
2.5.4. Tonnage tax
2.5.5. Mining tax
2.5.6. Interest payments and penalties
2.5.7. Alternative minimum taxes
2.5.8. Tax on value added
2.5.9. Taxes beyond the scope of IAS 12
2.5.10. Digital services taxes
2.6. Differences between IFRS and US GAAP
2.7. Developments with respect to COVID-19
Chapter 3: Book-to-Tax Differences: Permanent and Temporary
3.1. Introduction
3.2. Tax returns and reconciliation of financial statements
3.3. Adjustment of profit for tax purposes and the performance statements
3.4. Recovery of assets and settlement of liabilities
3.5. Impact of COVID-19 on IFRS reporting and deferred tax calculation
3.6. Frequently asked questions
Chapter 4: Current Tax and Prior Year Adjustments
4.1. Introduction
4.2. The process
4.3. Calculate current tax for the year
4.3.1. Calculate taxable income for the year
4.3.1.1. Recognition of current tax liabilities and current tax assets
4.3.2. Tax rates
4.3.3. Tax incentives
4.3.4. Uncertain tax positions
4.3.5. Tax loss carry-back claims
4.4. Calculate any prior year adjustments
4.4.1 Prior year adjustments
4.4.2. Change in accounting estimate vs. error
4.5. Reconcile tax accounts
4.5.1. Introduction
4.5.2. Balance sheet classification
4.5.3. Discounting
4.6. Conclusion
Chapter 5: Deferred Taxes
5.1. Introduction.
5.2. Origin of deferred tax assets
5.3. Overview of deferred tax assets and liabilities
5.3.1. Recognition
5.3.2. Measurement
5.3.3. Presentation
5.4. Practical approach to calculating deferred tax
5.5. Basic principles of carrying amount
5.6. Tax base as the basis for calculating deferred tax
5.6.1. Tax base of an asset
5.6.2. Tax base of a liability
5.6.3. Tax base of revenue received in advance
5.6.4. Uncertainty in determining the tax base
5.7. Tax base without a carrying amount
5.8. Calculate the temporary differences
5.8.1. Temporary difference
5.8.2. Taxable temporary differences
5.8.2.1. Assets
5.8.2.2. Liabilities
5.8.2.3. Other examples of taxable temporary differences
5.8.3. Deductible temporary differences
5.8.3.1. Assets
5.8.3.2. Liabilities
5.8.3.3. Other examples of deductible temporary differences
5.8.4. Other examples of temporary differences
5.9. Recognition criteria and initial recognition exemptions
5.9.1. Initial recognition exemption
5.9.2. Initial recognition of goodwill exempted from deferred tax
5.9.3. Exemption from recognizing outside basis deferred tax
5.9.4. Exemption from recognition of deferred tax assets
5.10. Manner of expected recovery
5.10.1. Substantively enacted tax rates
5.10.2. Tax rates based on manner of recovery
5.10.3. Recovery of investment property
5.10.4. Different tax rates for levels of taxable profit
5.11. Reconcile movements in deferred tax balances
5.11.1. Disclosure of deferred tax movements
5.11.2. Accounting for a deferred tax movement
5.11.2.1. Deferred tax movements in the income statement
5.11.2.2. Deferred tax movements in other comprehensive income
5.11.2.3. Deferred tax movements in equity
5.11.3. Disallowance of discounting
5.11.4. Deferred tax on capital losses.
5.12. Practical issues
5.12.1. Investment tax credits
5.12.2. Deferred tax on compound financial instruments
5.12.3. Divestments: Rollover relief
5.12.4. Intra-group transactions
5.12.5. Tax consideration during uncertain times (COVID-19)
Chapter 6: Deferred Tax Asset Recognition
6.1. Introduction
6.2. Deferred tax assets
6.2.1. Relevant deferred tax assets and GAAPs
6.2.2. Recognizing a deferred tax asset
6.3. Deferred tax assets on unused tax losses and credits
6.3.1. Background
6.3.2. The threshold: "Probable"
6.3.3. History of recent losses
6.3.4. Convincing other evidence
6.3.5. Specific tax regimes
6.4. Tax rate to be used
6.5. Discounting
6.6. Netting
6.7. The impact of the COVID-19 virus outbreak on the recognition of deferred tax assets as examples of non-recurrent events that still carry significant uncertainty to the future
6.8. Simplified checklist for deferred tax assets recognition
6.9. Frequently Asked Questions
Chapter 7: Tax Exposures
7.1. Introduction
7.2. Basic theory and technical guidance
7.2.1. Identification of uncertain tax treatments
7.2.1.1. What are uncertain tax treatments?
7.2.1.2. To consider uncertain tax treatments separately or together (determine unit of account)
7.2.2. Recognition
7.2.2.1. Evidence to support recognition
7.2.2.2. Detection risk
7.2.2.3. Tax opinions
7.2.2.4. Uncertainties related to valuation
7.2.2.5. Temporary differences
7.2.3. Measurement
7.2.3.1. Measurement under IFRS - Expected value method
7.2.3.2. Measurement under IFRS - Most likely amount method
7.2.3.3. Measurement under US GAAP
7.2.3.4. Examples of US GAAP and IFRS recognition and measurement
7.2.3.4.1. Example of transfer pricing-related uncertain tax position
7.2.3.4.2. Binary tax position.
7.2.4. Subsequent events
7.2.5. Effective settlement and statute of limitations
7.2.6. Interest and penalties
7.2.6.1. Accounting policy election under US GAAP
7.2.6.2. Judgement under IFRS
7.2.7. Presentation in the statement of financial position
7.2.8. Financial statements disclosures
7.3. Conclusion
Chapter 8: Disclosure Notes
8.1. Introduction
8.2. Presentation versus disclosure
8.3. Presentation and disclosure requirements IAS 12
8.3.1. Introduction
8.3.2. Presentation
8.3.2.1. Offsetting current taxes
8.3.2.2. Offsetting deferred taxes
8.3.2.3. Tax expense
8.3.2.4. Exchange differences on deferred foreign tax liabilities or assets
8.3.3. Disclosure
8.3.3.1. Total tax expense (income)
8.3.3.2. Effective tax rate reconciliation
8.3.3.3. Tax rates
8.3.3.4. Tax via equity and other comprehensive income
8.3.3.5. Overview of tax losses/non-recognized deferred tax assets
8.3.3.6. Investments in subsidiaries, branches and associates and interests in joint arrangements
8.3.3.7. Deferred taxes
8.3.3.8. Discontinued operations
8.3.3.9. Income tax consequences of dividends
8.3.3.10. Business combinations
8.3.3.11. Future taxable income
8.3.3.12. Tax contingencies and events after the reporting period
8.4. Non-IAS 12 presentation and disclosure requirements
8.4.1. Introduction
8.4.2. IAS 1: Presentation of financial statements
8.4.3. IAS 7: Statement of cash flows
8.4.4. IAS 10: Events after the reporting period
8.4.5. IFRS 3: Business Combinations
8.4.6. IFRS 8: Operating Segments
8.5. Conclusion
Chapter 9: Special Items
9.1. Introduction
9.2. Initial recognition
9.2.1. General rule of initial recognition
9.2.2. Mergers
9.2.3. Assets carried at fair value
9.2.4. Change in tax status of the entity.
9.2.5. Migration of an entity.