25. October 2019
The ASCG today sent their comment letters on the IASB ED/2019/5 Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Proposed amendments to IAS 12) to the IASB and to EFRAG.
Overall, we support the IASB’s intention to clarify the accounting for deferred tax on transactions that give rise to both an asset and a liability and, therefore, to amend IAS 12 narrowly.
We agree with the Board’s conclusion that the recognition exemption shall not be applied to the initial recognition of an asset or a liability to the extent that an entity would recognise equal and off-setting amounts of deferred tax assets and liabilities related to this asset or liability. Thus, we support the proposed solution to narrow the application of the recognition exemption so that it would not apply to the transactions addressed in the ED. Doing so, we think, will reduce diversity in practice for such transactions.
Notwithstanding our general support we offer some considerations about the requirements in para. 22A which proposes to limit the recognition of a deferred tax liability to the amount of the deferred tax asset from the same transaction and recommend the Board to reconsider the provisions of this paragraph.