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Deferred tax

Andrew Archer Andrew Archer

Deferred tax: A Chief Financial Officer's guide to avoiding the pitfalls

Preparation of financial statements under International Financial Reporting Standards
(IFRSs) requires the application of IAS 12 ‘Income Taxes’ (IAS 12). Income
taxes, as defined in IAS 12, include current tax and deferred tax. For many
finance executives the concepts underlying deferred tax are not intuitive.
Applying these concepts also requires a thorough knowledge of the relevant tax
laws. IAS 12 takes a mechanistic approach to the computation but also requires
significant judgement in some areas. For all these reasons, many Chief Financial
Officers (CFOs) find that the calculation of a deferred tax provision causes
significant practical difficulties.

The guide reflects the collective experience of Grant Thornton International’s IFRS team and member firm IFRS experts. It addresses IAS 12’s  key application issues related to deferred taxes and includes interpretational guidance in certain problematic