(April 10, 2015)
On April 9, 2015 on the website of the IFRS Foundation and the IASB the March 2015 IFRS Interpretations Committee Update (IFRIC Update) was published. The Interpretations Committee met in London on March 24, 2015. One of the items on the agenda was titled: “Deliberation of comments on proposals for narrow-scope amendments: IAS 12 Income Taxes – Exposure Draft Recognition of deferred tax assets for unrealised losses (Proposed amendments to IAS 12) (Agenda Paper 3).”
With respect to this item the March 2015 IFRIC Update as published on the website of the IFRS Foundation and the IASB states the following:
“Deliberation of comments received on proposals for narrow-scope amendments
IAS 12 Income Taxes—Exposure Draft Recognition of deferred tax assets for unrealised losses (Proposed amendments to IAS 12) (Agenda Paper 3)
In August 2014, the IASB published for comment the Exposure Draft Recognition of Deferred Tax Assets for Unrealised Losses (Proposed amendments to IAS 12). The comment period ended on 18 December 2014.
At this meeting, the Interpretations Committee was presented with a summary and an analysis of the 68 comment letters received on the Exposure Draft.
Most respondents broadly support the proposals. They think that the proposed amendments are consistent with the principles in IAS 12 and reduce the risk of diversity in practice.
However, some respondents requested further clarification or simplification of the proposed amendments. Some respondents disagreed with the proposed limited retrospective application of the amendment.
The Interpretations Committee decided to propose that the IASB should proceed with the proposed amendments, subject to some amendments to the proposed wording as follows:
a. revise the example illustrating paragraph 26(d) to clarify that the debt instrument is measured at fair value and remove information that is superfluous to the objective of the example;
b. delete the last two sentences of paragraph 29A and the examples in the last sentence of paragraph BC15;
c. add a sentence in paragraph BC18 to clarify ‘taxable profit excluding tax deductions’ used for assessing the utilisation of deductible temporary differences;
d. clarify what is meant by limited retrospective application in paragraph BC24; and
e. shorten Illustrative Example 7 and amend it to be consistent with paragraph 63.
The Interpretations Committee also recommended that:
a. the example illustrating paragraph 26(d) should be further shortened and an additional explanation about the identification of the tax base should be included in the Basis for Conclusions; and
b. limited retrospective application should be further clarified and consideration given to the need to recycle amounts from other comprehensive income in subsequent periods.
The Interpretations Committee expressed concern about the ability of an entity to recover an asset for more than its carrying amount when it is measured at fair value and when recovery is not based on contractual cash flows. The Interpretations Committee asked the staff to include a discussion of the concern in the Basis for Conclusions.
The staff will present the Interpretations Committee's recommendations at a future IASB meeting.”
The Agenda Papers were already published earlier on the website of the IFRS Foundation and the IASB.
Click here to be forwarded to Agenda Paper 3: “Recognition of Deferred Tax Assets for Unrealised Losses” as published on the website of the IFRS Foundation and the IASB, which will open in a new window.
Click here to be forwarded to Agenda Paper 3A: “Recognition of Deferred Tax Assets for Unrealised Losses— Proposed amendments to IAS 12” as published on the website of the IFRS Foundation and the IASB, which will open in a new window.
Click here to be forwarded to the March 2015 IFRIC Update as published on the website of the IFRS Foundation and the IASB, which will open in a new window.
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