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Educational Material on Ind AS 12 Income Taxes

Ind AS 12 Income Taxes : IAS 12 Income Taxes implements a so-called ‘comprehensive balance sheet method’ of accounting for income taxes which recognises both the current tax consequences of transactions and events and the future tax consequences of the future recovery or settlement of the carrying amount of an entity’s assets and liabilities. Differences between the carrying amount and tax base of assets and liabilities, and carried forward tax losses and credits, are recognised, with limited exceptions, as deferred tax liabilities or deferred tax assets, with the latter also being subject to a ‘probable profits’ test. IAS 12 was reissued in October 1996 and is applicable to annual periods beginning on or after 1 January 1998.

History of IAS 12

Date Development Comments
April 1978 Exposure Draft E13 Accounting for Taxes on Income published  
July 1979 IAS 12 Accounting for Taxes on Income issued  
January 1989 Exposure Draft E33 Accounting for Taxes on Income published  
1994 IAS 12 (1979) was reformatted  
October 1994 Exposure Draft E49 Income Taxes published  
October 1996 IAS 12 Income Taxes issued Operative for financial statements covering periods beginning on or after 1 January 1988
October 2000 Limited Revisions to IAS 12 published (tax consequences of dividends) Operative for financial statements covering periods beginning on or after 1 January 2001
31 March 2009 Exposure Draft ED/2009/2 Income Tax published Comment deadline 31 July 2009
(proposals were not finalised)
10 September 2010 Exposure Draft ED/2010/11 Deferred Tax: Recovery of Underlying Assets (Proposed amendments to IAS 12) published Comment deadline 9 November 2010
20 December 2010 Amended by Deferred Tax: Recovery of Underlying Assets Effective for annual periods beginning on or after 1 January 2013 (EU effective date) and annual periods beginning on or after 1 January 2012 (IASB effective date).
19 January 2016 Amended by Recognition of Deferred Tax Assets for Unrealised Losses Effective for annual periods beginning on or after 1 January 2017

Educational Material on Ind AS 12 Income Taxes

Ind AS 12 Income Taxes : The accounting standard IAS 12 sets out the accounting treatment for income taxes, including all domestic and foreign taxes which are based on taxable profits and those payable by a subsidiary, associate or joint venture on distributions to the reporting entity. Find articles, books and online resources providing quick links to the standard, summaries, guidance and news of recent developments. 

Meaning and Definition of Income Tax 

Meaning : An income tax is a tax that governments impose on financial income generated by all entities within their jurisdiction. By law, businesses and individuals must file an income tax return every year to determine whether they owe any taxes or are eligible for a tax refund. Income tax is a key source of funds that the government uses to fund its activities and serve the public. Income tax refers to annual taxes levied by the federal government and most state governments on individual and business income. By law, businesses and individuals must file federal and state income tax returns every year to determine whether they owe taxes.

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Definition: An income tax is a government tax on the taxable profit earned by an individual or corporation. The resulting revenue is usually one of the chief sources of cash for a government entity. It is considered one of the more fair forms of taxation, since it is only imposed if a person or business has been successful enough to generate taxable income. Thus, its impact on the poor or unprofitable is minor to nonexistent.

Objective of IAS 12 Income Tax 

The objective of IAS 12 (1996) is to prescribe the accounting treatment for income taxes.

In meeting this objective, IAS 12 notes the following:

  • It is inherent in the recognition of an asset or liability that that asset or liability will be recovered or settled, and this recovery or settlement may give rise to future tax consequences which should be recognised at the same time as the asset or liability
  • An entity should account for the tax consequences of transactions and other events in the same way it accounts for the transactions or other events themselves.

Relevant link to download the Educational Material: Ind AS 12 Income Taxes

Educational Material on Ind AS 12 Income Taxes 

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Educational Material on Ind AS 12 Income Taxes

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