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• Defines a temporary difference as the difference between the carrying amount of an asset or liability and its tax base - an assessable temporary difference exists where the carrying amount of an asset exceeds its tax base while an deductible temporary difference exists where the carrying amount of a liability exceeds its tax base;

• Current tax liabilities (to the extent unpaid) and current tax assets (arising from tax losses or where the amount paid to the tax authority exceeds the amount due) must be recognised for any current and prior period taxes due measured at the rates applicable for the period.

• A deferred tax liability must be recognised for the future tax consequences of all taxable temporary differences with three exceptions:
• Initial recognition of goodwill
 

• Initial recognition of an asset/liability other than in a business combination which, at the time of the transaction, does not affect either the accounting or the taxable profit; and
• Certain investments in subsidiaries, branches, associates and interests in joint ventures.
• A deferred tax asset must be recognised for deductible temporary differences, unused tax losses, and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilised, with the exceptions of initial recognition of an asset/liability and certain investments.
 

• Deferred tax liabilities (assets) must be measured at the tax rates expected to apply when the liability is settled or asset is realised, using the tax rates/laws that have been enacted or substantively enacted by the reporting date.
• Discounting of deferred tax assets and liabilities is prohibited.

• Current and deferred tax must be recognised as an expense or income in the profit or loss except if it relates to a business combination or to an amount recognised as a direct debit/credit in equity (eg. asset revaluation).
 

• Current and deferred tax is recognised directly in equity if the tax relates to items that are recognised directly in equity.

• Current tax assets and liabilities can be offset only if there is a legal enforceable right and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.
 

• Deferred tax assets and liabilities can be offset only if there is a legal enforceable right and they relate to income taxes levied by the same taxation authority.
 

• Tax expense (income) must be presented on the face of the income statement.
 

• Disclosures include:
• Separate disclosure of the main components of tax expense (income)
• Aggregate current and deferred tax relating to items recognised directly in equity
• Certain information about the relationship between tax expense (income) and accounting profit
• Certain information regarding temporary differences
• Certain information in relation to deferred tax assets