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Contents
29.2 Recognition and measurement of current tax.
29.2.1 Extract from FRS102: Section 29.3 – 29.5.
29.2.2.1 What tax rate to use.
29.2.2.1.1 Ireland and UK rules.
29.2.2.1.2 Impact of change in tax rate – substantively enacted just after year end.
29.2.2.1.3 Change in rate during the year.
29.2.2.2 Uncertain tax positions.
29.2.2.2.2 Assessing whether a provision is required.
29.2.2.3 Interest charged on late payment of taxes.
29.2.2.5 Adjustments in respect of prior years.
26.2.2.6 Recognition of current tax asset.
29.2.2.6.1 Tax paid in excess of tax charge for current and previous periods.
29.2.2.6.2 Tax losses set back to prior periods.
29.2.2.7 Allocation of the tax expense.
29.3 Provision for close company surcharge.
29.3.1 Extract from FRS 102 Section 29.14.
29.4 Recognition of deferred tax.
29.4.1 Extract from FRS102: Section 29.6–29.17.
29.4.2.1 Deferred tax defined and the purpose of deferred tax.
29.4.2.2 Permanent differences.
29.4.2.2.1.1 The one exception for recognising a permanent difference for deferred tax.
29.4.2.3 Temporary differences.
29.4.2.3.1 Temporary differences defined.
29.4.2.3.2 Definition of deferred tax assets and instances where they arise.
29.4.2.3.2.1 When does a deferred tax asset exist including examples.
29.4.2.3.3 Definition of deferred tax liabilities and instances where they arise.
29.4.2.3.3.1 When does a deferred tax liability exist including examples.
29.4.2.3.4 Recognition of timing differences – the rules.
29.4.2.3.4.1 Unrelieved tax losses – The rule recognition or not.
29.4.2.3.4.4 No recognition of timing difference on goodwill recognised in a business combination.
29.4.2.4.0 Initial recognition exception.
29.4.2.4.1 What tax rate to use.
29.4.2.4.1.1 The rate to use for non- depreciable land and investment property.
29.4.2.4.1.2 Review of the recovery of how a deferred tax asset/liability is recovered/settled.
29.4.2.4.1.2.1 Manner of recovery through use.
29.4.2.4.1.2.2 Manner of recovery through sale.
29.4.2.4.1.2.3 Manner of recovery – dual use.
29.4.2.4.1.3 Effect of change in classification of assets.
29.4.2.4.1.4 Determining the value of timing difference.
29.4.2.4.1.4.2 Indexation and how is this accounted for.
29.4.2.4.1.6 Deferred tax impact if unlikely to be taxable/tax deductible on future sale.
29.4.2.4.1.7 Steps involved to working out deferred tax.
29.4.2.4.1.8 Some examples of timing differences.
29.4.2.4.1.8.1.2 Steps to calculate deferred tax for fixed asset timing differences.
29.4.2.4.1.8.1.3 Application of deferred tax to fixed assets.
29.4.2.4.1.8.1.3.1 Deferred tax allowable for tax and depreciable.
29.4.2.4.1.8.1.3.2 Asset allowable for tax, depreciable and revalued.
29.4.2.4.1.8.1.3.3.1 Treatment of depreciation on upward revaluation.
29.4.2.4.1.8.2 Accounting for deferred tax on non-depreciable land.
29.4.2.4.1.8.3 Deferred tax on investment properties carried at fair value.
29.4.2.4.1.8.4 Pension contributions/royalty charges.
29.4.2.4.1.8.5 Finance leases.
29.4.2.4.1.8.6 Unrelieved tax losses.
29.4.2.4.1.8.6.1 Ability to recognise unutilised losses against other deferred tax liabilities.
29.4.2.4.1.8.7 Fair value adjustments.
29.4.2.4.1.8.7.1 Further exampls of deferred tax where fair value adjustments are recognised.
29.4.2.4.1.8.7.1.1 Non-puttable ordinary shares and deferred tax.
29.4.2.4.1.8.7.1.2 Interest rate swaps – derivatives and deferred tax.
29.4.2.4.1.8.7.1.3 Forward foreign currency contract and deferred tax.
29.4.2.4.1.8.8 Defined benefit obligations.
29.4.2.4.1.8.9 Consolidation adjustments.
29.4.2.4.1.8.10 Investment in associates, joint ventures, subsidiaries in consolidated accounts.
29.42.4.1.8.11 Assets partly allowable for tax purposes.
29.4.2.4.1.8.12 Items expensed which are capital in nature (allowable for capital allowances).
29.4.2.4.1.8.13 Transition adjustments to a new GAAP.
29.5 Measurement of deferred tax on business combinations.
29.5.1 Extract from FRS102: Section 29.11.
29.6 Withholding tax on dividends.
29.6.1 Extract from FRS102: Section 29.18-29.19.
29.7.1 Extract from FRS102: Section 29.24-29.24A.
29.7.2.1 Off setting current tax.
29.7.2.2 Offsetting deferred tax assets and liabilities.
29.8 Value Added Tax (“VAT”) and other similar taxes.
29.8.1 Extract from FRS 102: Section 29.20.
29.9 Presentation and disclosures.
29.9.1 Extract from FRS102: Section 29.21-29.27.
29.9.2.1.1 Where to recognise the tax charge/credits in the statements of comprehensive income.
29.9.2.1.2 Where to recognise the tax asset or liability on the balance sheet.
29.9.2.2.2 Accounting Policies.
29.9.2.2.3 Notes to the financial statements.
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29.8 Value Added Tax (“VAT”) and other similar taxes
29.8.1 Extract from FRS 102: Section 29.20
29.20 Turnover shown in profit or loss shall exclude VAT and other similar sales taxes on taxable outputs and VAT imputed under the flat rate VAT scheme. Expenses shall exclude recoverable VAT and other similar recoverable sales taxes. Irrecoverable VAT allocable to fixed assets and to other items disclosed separately in the financial statements shall be included in their cost where practicable and material.
29.8.2 OmniPro comment
As per Section 29.20 of FRS 102 turnover and costs should be stated exclusive of vat where the company is vat registered other than irrecoverable VAT as stated in the VAT Acts. Where the entity is not vat registered it should be included inclusive of vat.
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Examples
Example 1: Impact of change in tax rate – substantively enacted just after year end.
Example 2: Change in rate during the year.
Example 3: Carry back of losses.
Example 4: Close company surcharge.
Example 5: Close company surcharge – no distributable reserves.
Example 6: Losses forward – recognition of deferred tax.
Example 7: Deferred tax liabilities available to utilise deferred tax assets.
Example 8: Conditions for retaining tax allowances have been met.
Example 9: Dual use manner of recovery.
Example 10: Indexation of base cost – non depreciable asset.
Example 11: Allowable for tax and depreciable.
Example 12: Asset allowable for tax, depreciable and revalued.
Example 14: Transfer of depreciation on revalued amount from profit and loss reserves.
Example 16: Fair value movements and deferred tax impact.
Example 18: Pensions/royalties.
Example 19: Pensions/royalties.
Example 21: Non-puttable ordinary shares and deffered tax.
Example 22: Interest rate swaps – derivatives and deffered tax.
Example 23: Forward foreign currency contract and deffered tax.
Example 27: Defined benefit obligations.
Example 29: Deferred tax on net defined benefit asset/liability.
Example 30: Recognising deferred tax.
Example 31: Deferred tax on consolidated adjustments – elimination of profit from inventory.
Example 32: Undistributed profits of a subsidiary.
Example 33: Assets partly allowable for tax purposes.
Example 34: Deferred tax on business combinations.
Example 36: Dividend received.
Example 37: Offset of current tax assets and liabilities.
Example 38: Offset of current tax assets and liabilities.
Example 39: Offset of current tax assets and liabilities.
Example 40: Offset of deferred tax assets and liabilities.
Example 41: Extract from the accounting policy note and notes to the financial statements.
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