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IFRS Update May 2021

IFRS Update May 2021

The IASB has issued targeted amendments to IAS 12, the IFRS Standard on income taxes, to specify how companies should account for deferred tax on transactions such as leases and decommissioning obligations. 

In specified circumstances, companies are exempt from recognising deferred tax when they recognise assets or liabilities for the first time. Previously, there had been some uncertainty about whether the exemption applied to transactions such as leases and decommissioning obligations—transactions for which companies recognise both an asset and a liability. 

The amendments clarify that the exemption does not apply and that companies are required to recognise deferred tax on such transactions, and are effective for annual reporting periods beginning on or after 1 January 2023, with early application permitted.

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