Income Taxes

In April 2001 the International Accounting Standards Board (Board) adopted
IAS 12 Income Taxes, which had originally been issued by the International Accounting
Standards Committee in October 1996. IAS 12 Income Taxes replaced parts of
IAS 12 Accounting for Income Taxes (issued in July 1979).
In December 2010 the Board amended IAS 12 to address an issue that arises when entities
apply the measurement principle in IAS 12 to temporary differences relating to
investment properties that are measured at fair value. That amendment also
incorporated some guidance from a related Interpretation (SIC-21 Income Taxes—Recovery of
Revalued Non-Depreciable Assets).
In January 2016 the Board issued Recognition of Deferred Tax Assets for Unrealized
Losses (Amendments to IAS 12) to clarify the requirements on recognition of deferred tax
assets related to debt instruments measured at fair value.
Other Standards have made minor consequential amendments to IAS 12. They include
IFRS 11 Joint Arrangements (issued May 2011), Presentation of Items of Other Comprehensive
Income (Amendments to IAS 1) (issued June 2011), Investment Entities (Amendments to
IFRS 10, IFRS 12 and IAS 27) (issued October 2012), IFRS 9 Financial Instruments (Hedge
Accounting and amendments to IFRS 9, IFRS 7 and IAS 39) (issued November 2013),
IFRS 15 Revenue from Contracts with Customers (issued May 2014), IFRS 9 Financial
Instruments (issued July 2014), IFRS 16 Leases (issued January 2016), Annual Improvements to
IFRS Standards 2015–2017 Cycle (issued December 2017) and Amendments to References to the
Conceptual Framework in IFRS Standards (issued March 2018).

International Accounting Standard 12 Income Taxes (IAS 12) is set out in paragraphs
1–99. All the paragraphs have equal authority but retain the IASC format of the
Standard when it was adopted by the IASB. IAS 12 should be read in the context of
its objective and the Basis for Conclusions, the Preface to IFRS Standards and
the Conceptual Framework for Financial Reporting. IAS 8 Accounting Policies, Changes in
Accounting Estimates and Errors provides a basis for selecting and applying accounting
policies in the absence of explicit guidance.

International Accounting Standard 12
Income Taxes
Objective

The objective of this Standard is to prescribe the accounting treatment for income taxes.
The principal issue in accounting for income taxes is how to account for the current and
future tax consequences of:
(a) the future recovery (settlement) of the carrying amount of assets (liabilities) that
are recognised in an entity’s statement of financial position; and
(b) transactions and other events of the current period that are recognised in an
entity’s financial statements.
It is inherent in the recognition of an asset or liability that the reporting entity expects to
recover or settle the carrying amount of that asset or liability. If it is probable that
recovery or settlement of that carrying amount will make future tax payments larger
(smaller) than they would be if such recovery or settlement were to have no tax
consequences, this Standard requires an entity to recognise a deferred tax liability
(deferred tax asset), with certain limited exceptions.
This Standard requires an entity to account for the tax consequences of transactions and
other events in the same way that it accounts for the transactions and other events
themselves. Thus, for transactions and other events recognised in profit or loss, any
related tax effects are also recognised in profit or loss. For transactions and other events
recognised outside profit or loss (either in other comprehensive income or directly in
equity), any related tax effects are also recognised outside profit or loss (either in other
comprehensive income or directly in equity, respectively). Similarly, the recognition of
deferred tax assets and liabilities in a business combination affects the amount of
goodwill arising in that business combination or the amount of the bargain purchase
gain recognised.
This Standard also deals with the recognition of deferred tax assets arising from unused
tax losses or unused tax credits, the presentation of income taxes in the financial
statements and the disclosure of information relating to income taxes.

Scope

This Standard shall be applied in accounting for income taxes.
For the purposes of this Standard, income taxes include all domestic and
foreign taxes which are based on taxable profits. Income taxes also include
taxes, such as withholding taxes, which are payable by a subsidiary, associate
or joint arrangement on distributions to the reporting entity.
[Deleted]

This Standard does not deal with the methods of accounting for government
grants (see IAS 20 Accounting for Government Grants and Disclosure of Government
Assistance) or investment tax credits. However, this Standard does deal with the
accounting for temporary differences that may arise from such grants or
investment tax credits.

Definitions

The following terms are used in this Standard with the meanings specified:
Accounting profit is profit or loss for a period before deducting tax expense.
Taxable profit (tax loss) is the profit (loss) for a period, determined in
accordance with the rules established by the taxation authorities, upon
which income taxes are payable (recoverable).
Tax expense (tax income) is the aggregate amount included in the
determination of profit or loss for the period in respect of current tax and
deferred tax.
Current tax is the amount of income taxes payable (recoverable) in respect
of the taxable profit (tax loss) for a period.
Deferred tax liabilities are the amounts of income taxes payable in future
periods in respect of taxable temporary differences.
Deferred tax assets are the amounts of income taxes recoverable in future
periods in respect of:
(a) deductible temporary differences;
(b) the carryforward of unused tax losses; and
(c) the carryforward of unused tax credits.
Temporary differences are differences between the carrying amount of an
asset or liability in the statement of financial position and its tax base.
Temporary differences may be either:
(a) taxable temporary differences, which are temporary differences that
will result in taxable amounts in determining taxable profit (tax
loss) of future periods when the carrying amount of the asset or
liability is recovered or settled; or
(b) deductible temporary differences, which are temporary differences that
will result in amounts that are deductible in determining taxable
profit (tax loss) of future periods when the carrying amount of the
asset or liability is recovered or settled.
The tax base of an asset or liability is the amount attributed to that asset or
liability for tax purposes.
Tax expense (tax income) comprises current tax expense (current tax income)
and deferred tax expense (deferred tax income).

Tax base

The tax base of an asset is the amount that will be deductible for tax purposes
against any taxable economic benefits that will flow to an entity when it
recovers the carrying amount of the asset. If those economic benefits will not
be taxable, the tax base of the asset is equal to its carrying amount.

Examples

1 A machine cost 100. For tax purposes, depreciation of 30 has already
been deducted in the current and prior periods and the remaining cost
will be deductible in future periods, either as depreciation or through a
deduction on disposal. Revenue generated by using the machine is
taxable, any gain on disposal of the machine will be taxable and any loss
on disposal will be deductible for tax purposes. The tax base of the machine
is 70.
2 Interest receivable has a carrying amount of 100. The related interest
revenue will be taxed on a cash basis. The tax base of the interest receivable is
nil.
3 Trade receivables have a carrying amount of 100. The related revenue
has already been included in taxable profit (tax loss). The tax base of the
trade receivables is 100.
4 Dividends receivable from a subsidiary have a carrying amount of 100.
The dividends are not taxable. In substance, the entire carrying amount of the
asset is deductible against the economic benefits. Consequently, the tax base of the
dividends receivable is 100.
(a)

5 A loan receivable has a carrying amount of 100. The repayment of the
loan will have no tax consequences. The tax base of the loan is 100.
(a) Under this analysis, there is no taxable temporary difference. An alternative
analysis is that the accrued dividends receivable have a tax base of nil and that a
tax rate of nil is applied to the resulting taxable temporary difference of 100.
Under both analyses, there is no deferred tax liability.
The tax base of a liability is its carrying amount, less any amount that will be
deductible for tax purposes in respect of that liability in future periods. In the
case of revenue which is received in advance, the tax base of the resulting
liability is its carrying amount, less any amount of the revenue that will not
be taxable in future periods.
Examples
1 Current liabilities include accrued expenses with a carrying amount of
100. The related expense will be deducted for tax purposes on a cash
basis. The tax base of the accrued expenses is nil.
2 Current liabilities include interest revenue received in advance, with a
carrying amount of 100. The related interest revenue was taxed on a
cash basis. The tax base of the interest received in advance is nil.

Examples
3 Current liabilities include accrued expenses with a carrying amount of
100. The related expense has already been deducted for tax purposes. The
tax base of the accrued expenses is 100.
4 Current liabilities include accrued fines and penalties with a carrying
amount of 100. Fines and penalties are not deductible for tax purposes.
The tax base of the accrued fines and penalties is 100.
(a)

5 A loan payable has a carrying amount of 100. The repayment of the loan
will have no tax consequences. The tax base of the loan is 100.
(a) Under this analysis, there is no deductible temporary difference. An alternative
analysis is that the accrued fines and penalties payable have a tax base of nil and
that a tax rate of nil is applied to the resulting deductible temporary difference of
100. Under both analyses, there is no deferred tax asset.
Some items have a tax base but are not recognized as assets and liabilities in
the statement of financial position. For example, research costs are recognized
as an expense in determining accounting profit in the period in which they
are incurred but may not be permitted as a deduction in determining taxable
profit (tax loss) until a later period. The difference between the tax base of the
research costs, being the amount the taxation authorities will permit as a
deduction in future periods, and the carrying amount of nil is a deductible
temporary difference that results in a deferred tax asset.
Where the tax base of an asset or liability is not immediately apparent, it is
helpful to consider the fundamental principle upon which this Standard is
based: that an entity shall, with certain limited exceptions, recognize a
deferred tax liability (asset) whenever recovery or settlement of the carrying
amount of an asset or liability would make future tax payments larger
(smaller) than they would be if such recovery or settlement were to have no
tax consequences. Example C following paragraph 51A illustrates
circumstances when it may be helpful to consider this fundamental principle,
for example, when the tax base of an asset or liability depends on the expected
manner of recovery or settlement.
In consolidated financial statements, temporary differences are determined by
comparing the carrying amounts of assets and liabilities in the consolidated
financial statements with the appropriate tax base. The tax base is determined
by reference to a consolidated tax return in those jurisdictions in which such a
return is filed. In other jurisdictions, the tax base is determined by reference
to the tax returns of each entity in the group.

Recognition of current tax liabilities and current tax assets

Current tax for current and prior periods shall, to the extent unpaid, be
recognised as a liability. If the amount already paid in respect of current
and prior periods exceeds the amount due for those periods, the excess
shall be recognised as an asset.

The benefit relating to a tax loss that can be carried back to recover
current tax of a previous period shall be recognized as an asset.
When a tax loss is used to recover current tax of a previous period, an entity
recognizes the benefit as an asset in the period in which the tax loss occurs
because it is probable that the benefit will flow to the entity and the benefit
can be reliably measured.

Recognition of deferred tax liabilities and deferred tax assets
Taxable temporary differences

A deferred tax liability shall be recognized for all taxable temporary
differences, except to the extent that the deferred tax liability arises from:
(a) the initial recognition of goodwill; or
(b) the initial recognition of an asset or liability in a transaction which:
(i) is not a business combination; and
(ii) at the time of the transaction, affects neither accounting
profit nor taxable profit (tax loss).

However, for taxable temporary differences associated with investments in
subsidiaries, branches and associates, and interests in joint arrangements,
a deferred tax liability shall be recognized in accordance
with paragraph 39.
It is inherent in the recognition of an asset that its carrying amount will be
recovered in the form of economic benefits that flow to the entity in future
periods. When the carrying amount of the asset exceeds its tax base, the
amount of taxable economic benefits will exceed the amount that will be
allowed as a deduction for tax purposes. This difference is a taxable temporary
difference and the obligation to pay the resulting income taxes in future
periods is a deferred tax liability. As the entity recovers the carrying amount
of the asset, the taxable temporary difference will reverse and the entity will
have taxable profit. This makes it probable that economic benefits will flow
from the entity in the form of tax payments. Therefore, this Standard requires
the recognition of all deferred tax liabilities, except in certain circumstances
described in paragraphs 15 and 39.

Example
An asset which cost 150 has a carrying amount of 100. Cumulative
depreciation for tax purposes is 90 and the tax rate is 25%.
The tax base of the asset is 60 (cost of 150 less cumulative tax depreciation of 90).
To recover the carrying amount of 100, the entity must earn taxable income of 100, but
will only be able to deduct tax depreciation of 60. Consequently, the entity will pay
income taxes of 10 (40 at 25%) when it recovers the carrying amount of the asset. The
difference between the carrying amount of 100 and the tax base of 60 is a taxable
temporary difference of 40. Therefore, the entity recognizes a deferred tax liability of 10
(40 at 25%) representing the income taxes that it will pay when it recovers the carrying
amount of the asset.
Some temporary differences arise when income or expense is included in
accounting profit in one period but is included in taxable profit in a different
period. Such temporary differences are often described as timing differences.
The following are examples of temporary differences of this kind which are
taxable temporary differences and which therefore result in deferred tax
liabilities:
(a) interest revenue is included in accounting profit on a time proportion
basis but may, in some jurisdictions, be included in taxable profit
when cash is collected. The tax base of any receivable recognized in the
statement of financial position with respect to such revenues is nil
because the revenues do not affect taxable profit until cash is collected;
(b) depreciation used in determining taxable profit (tax loss) may differ
from that used in determining accounting profit. The temporary
difference is the difference between the carrying amount of the asset
and its tax base which is the original cost of the asset less all
deductions in respect of that asset permitted by the taxation
authorities in determining taxable profit of the current and prior
periods. A taxable temporary difference arises, and results in a
deferred tax liability, when tax depreciation is accelerated (if tax
depreciation is less rapid than accounting depreciation, a deductible
temporary difference arises, and results in a deferred tax asset); and
(c) development costs may be capitalized and amortized over future
periods in determining accounting profit but deducted in determining
taxable profit in the period in which they are incurred. Such
development costs have a tax base of nil as they have already been
deducted from taxable profit. The temporary difference is the
difference between the carrying amount of the development costs and
their tax base of nil.
Temporary differences also arise when:
(a) the identifiable assets acquired and liabilities assumed in a business
combination are recognized at their fair values in accordance with
IFRS 3 Business Combinations, but no equivalent adjustment is made for
tax purposes (see paragraph 19);

(b) assets are revalued and no equivalent adjustment is made for tax
purposes (see paragraph 20);
(c) goodwill arises in a business combination (see paragraph 21);
(d) the tax base of an asset or liability on initial recognition differs from
its initial carrying amount, for example when an entity benefits from
non-taxable government grants related to assets (see paragraphs 22 and
33); or
(e) the carrying amount of investments in subsidiaries, branches and
associates or interests in joint arrangements becomes different from
the tax base of the investment or interest (see paragraphs 38–45).

Business combinations

With limited exceptions, the identifiable assets acquired and liabilities
assumed in a business combination are recognised at their fair values at the
acquisition date. Temporary differences arise when the tax bases of the
identifiable assets acquired and liabilities assumed are not affected by the
business combination or are affected differently. For example, when the
carrying amount of an asset is increased to fair value but the tax base of the
asset remains at cost to the previous owner, a taxable temporary difference
arises which results in a deferred tax liability. The resulting deferred tax
liability affects goodwill (see paragraph 66).

Assets carried at fair value

IFRSs permit or require certain assets to be carried at fair value or to be
revalued (see, for example, IAS 16 Property, Plant and Equipment, IAS 38 Intangible
Assets, IAS 40 Investment Property, IFRS 9 Financial Instruments and IFRS 16 Leases).
In some jurisdictions, the revaluation or other restatement of an asset to fair
value affects taxable profit (tax loss) for the current period. As a result, the tax
base of the asset is adjusted and no temporary difference arises. In other
jurisdictions, the revaluation or restatement of an asset does not affect taxable
profit in the period of the revaluation or restatement and, consequently, the
tax base of the asset is not adjusted. Nevertheless, the future recovery of the
carrying amount will result in a taxable flow of economic benefits to the
entity and the amount that will be deductible for tax purposes will differ from
the amount of those economic benefits. The difference between the carrying
amount of a revalued asset and its tax base is a temporary difference and gives
rise to a deferred tax liability or asset. This is true even if:
(a) the entity does not intend to dispose of the asset. In such cases, the
revalued carrying amount of the asset will be recovered through use
and this will generate taxable income which exceeds the depreciation
that will be allowable for tax purposes in future periods; or
(b) tax on capital gains is deferred if the proceeds of the disposal of the
asset are invested in similar assets. In such cases, the tax will
ultimately become payable on sale or use of the similar assets.

Goodwill

Goodwill arising in a business combination is measured as the excess of (a)
over (b) below:
(a) the aggregate of:
(i) the consideration transferred measured in accordance with
IFRS 3, which generally requires acquisition-date fair value;
(ii) the amount of any non-controlling interest in the acquiree
recognised in accordance with IFRS 3; and
(iii) in a business combination achieved in stages, the
acquisition-date fair value of the acquirer’s previously held
equity interest in the acquiree.

(b) the net of the acquisition-date amounts of the identifiable assets
acquired and liabilities assumed measured in accordance with IFRS 3.
Many taxation authorities do not allow reductions in the carrying amount of
goodwill as a deductible expense in determining taxable profit. Moreover, in
such jurisdictions, the cost of goodwill is often not deductible when a
subsidiary disposes of its underlying business. In such jurisdictions, goodwill
has a tax base of nil. Any difference between the carrying amount of goodwill
and its tax base of nil is a taxable temporary difference. However, this
Standard does not permit the recognition of the resulting deferred tax liability
because goodwill is measured as a residual and the recognition of the deferred
tax liability would increase the carrying amount of goodwill.
Subsequent reductions in a deferred tax liability that is unrecognized because
it arises from the initial recognition of goodwill are also regarded as arising
from the initial recognition of goodwill and are therefore not recognized
under paragraph 15(a). For example, if in a business combination an entity
recognizes goodwill of CU100 that has a tax base of nil, paragraph 15(a)
prohibits the entity from recognizing the resulting deferred tax liability. If the
entity subsequently recognizes an impairment loss of CU20 for that goodwill,
the amount of the taxable temporary difference relating to the goodwill is
reduced from CU100 to CU80, with a resulting decrease in the value of the
unrecognized deferred tax liability. That decrease in the value of the
unrecognized deferred tax liability is also regarded as relating to the initial
recognition of the goodwill and is therefore prohibited from being recognized
under paragraph 15(a).
Deferred tax liabilities for taxable temporary differences relating to goodwill
are, however, recognized to the extent they do not arise from the initial
recognition of goodwill. For example, if in a business combination an entity
recognizes goodwill of CU100 that is deductible for tax purposes at a rate of
20 per cent per year starting in the year of acquisition, the tax base of the
goodwill is CU100 on initial recognition and CU80 at the end of the year of
acquisition. If the carrying amount of goodwill at the end of the year of
acquisition remains unchanged at CU100, a taxable temporary difference of
CU20 arises at the end of that year. Because that taxable temporary difference does not relate to the initial recognition of the goodwill, the resulting deferred
tax liability is recognized.

Initial recognition of an asset or liability

A temporary difference may arise on initial recognition of an asset or liability,
for example if part or all of the cost of an asset will not be deductible for tax
purposes. The method of accounting for such a temporary difference depends
on the nature of the transaction that led to the initial recognition of the asset
or liability:
(a) in a business combination, an entity recognises any deferred tax
liability or asset and this affects the amount of goodwill or bargain
purchase gain it recognises (see paragraph 19);
(b) if the transaction affects either accounting profit or taxable profit, an
entity recognises any deferred tax liability or asset and recognises the
resulting deferred tax expense or income in profit or loss (see
paragraph 59);
(c) if the transaction is not a business combination, and affects neither
accounting profit nor taxable profit, an entity would, in the absence of
the exemption provided by paragraphs 15 and 24, recognise the
resulting deferred tax liability or asset and adjust the carrying amount
of the asset or liability by the same amount. Such adjustments would
make the financial statements less transparent. Therefore, this
Standard does not permit an entity to recognise the resulting deferred
tax liability or asset, either on initial recognition or subsequently (see
example below). Furthermore, an entity does not recognise subsequent
changes in the unrecognized deferred tax liability or asset as the asset
is depreciated.

Example illustrating paragraph 22(c)

An entity intends to use an asset which cost 1,000 throughout its useful life
of five years and then dispose of it for a residual value of nil. The tax rate is
40%. Depreciation of the asset is not deductible for tax purposes.
On disposal, any capital gain would not be taxable and any capital loss would
not be deductible.
As it recovers the carrying amount of the asset, the entity will earn taxable income of
1,000 and pay tax of 400. The entity does not recognise the resulting deferred tax
liability of 400 because it results from the initial recognition of the asset.
In the following year, the carrying amount of the asset is 800. In earning taxable
income of 800, the entity will pay tax of 320. The entity does not recognise the deferred
tax liability of 320 because it results from the initial recognition of the asset.
In accordance with IAS 32 Financial Instruments: Presentation the issuer of a compound financial instrument (for example, a convertible bond) classifies
the instrument’s liability component as a liability and the equity component
as equity. In some jurisdictions, the tax base of the liability component on
initial recognition is equal to the initial carrying amount of the sum of the liability and equity components. The resulting taxable temporary difference
arises from the initial recognition of the equity component separately from
the liability component. Therefore, the exception set out in paragraph 15(b)
does not apply. Consequently, an entity recognises the resulting deferred tax
liability. In accordance with paragraph 61A, the deferred tax is charged
directly to the carrying amount of the equity component. In accordance with
paragraph 58, subsequent changes in the deferred tax liability are recognised
in profit or loss as deferred tax expense (income).

Deductible temporary differences

A deferred tax asset shall be recognised for all deductible temporary
differences to the extent that it is probable that taxable profit will be
available against which the deductible temporary difference can be
utilised, unless the deferred tax asset arises from the initial recognition of
an asset or liability in a transaction that:
(a) is not a business combination; and
(b) at the time of the transaction, affects neither accounting profit nor
taxable profit (tax loss).
However, for deductible temporary differences associated with investments
in subsidiaries, branches and associates, and interests in joint
arrangements, a deferred tax asset shall be recognised in accordance with
paragraph 44.
It is inherent in the recognition of a liability that the carrying amount will be
settled in future periods through an outflow from the entity of resources
embodying economic benefits. When resources flow from the entity, part or
all of their amounts may be deductible in determining taxable profit of a
period later than the period in which the liability is recognised. In such cases,
a temporary difference exists between the carrying amount of the liability and
its tax base. Accordingly, a deferred tax asset arises in respect of the income
taxes that will be recoverable in the future periods when that part of the
liability is allowed as a deduction in determining taxable profit. Similarly, if
the carrying amount of an asset is less than its tax base, the difference gives
rise to a deferred tax asset in respect of the income taxes that will be
recoverable in future periods.

Example
An entity recognizes a liability of 100 for accrued product warranty costs.
For tax purposes, the product warranty costs will not be deductible until the
entity pays claims. The tax rate is 25%.
The tax base of the liability is nil (carrying amount of 100, less the amount that will be
deductible for tax purposes in respect of that liability in future periods). In settling the
liability for its carrying amount, the entity will reduce its future taxable profit by an
amount of 100 and, consequently, reduce its future tax payments by 25 (100 at 25%).
The difference between the carrying amount of 100 and the tax base of nil is a
deductible temporary difference of 100. Therefore, the entity recognizes a deferred tax
asset of 25 (100 at 25%), provided that it is probable that the entity will earn sufficient
taxable profit in future periods to benefit from a reduction in tax payments.
The following are examples of deductible temporary differences that result
in deferred tax assets:
(a) retirement benefit costs may be deducted in determining accounting
profit as service is provided by the employee, but deducted in
determining taxable profit either when contributions are paid to a
fund by the entity or when retirement benefits are paid by the entity.
A temporary difference exists between the carrying amount of the
liability and its tax base; the tax base of the liability is usually nil. Such
a deductible temporary difference results in a deferred tax asset as
economic benefits will flow to the entity in the form of a deduction
from taxable profits when contributions or retirement benefits are
paid;
(b) research costs are recognized as an expense in determining accounting
profit in the period in which they are incurred but may not be
permitted as a deduction in determining taxable profit (tax loss) until a
later period. The difference between the tax base of the research costs,
being the amount the taxation authorities will permit as a deduction
in future periods, and the carrying amount of nil is a deductible
temporary difference that results in a deferred tax asset;
(c) with limited exceptions, an entity recognizes the identifiable assets
acquired and liabilities assumed in a business combination at their fair
values at the acquisition date. When a liability assumed is recognized
at the acquisition date but the related costs are not deducted in
determining taxable profits until a later period, a deductible
temporary difference arises which results in a deferred tax asset. A
deferred tax asset also arises when the fair value of an identifiable
asset acquired is less than its tax base. In both cases, the resulting
deferred tax asset affects goodwill (see paragraph 66); and
(d) certain assets may be carried at fair value, or may be revalued, without
an equivalent adjustment being made for tax purposes (see
paragraph 20). A deductible temporary difference arises if the tax base
of the asset exceeds its carrying amount.

Example illustrating paragraph 26(d)

Identification of a deductible temporary difference at the end of Year 2:
Entity A purchases for CU1,000, at the beginning of Year 1, a debt
instrument with a nominal value of CU1,000 payable on maturity in 5 years
with an interest rate of 2% payable at the end of each year. The effective
interest rate is 2%. The debt instrument is measured at fair value.
At the end of Year 2, the fair value of the debt instrument has decreased to
CU918 as a result of an increase in market interest rates to 5%. It is probable
that Entity A will collect all the contractual cash flows if it continues to hold
the debt instrument.
Any gains (losses) on the debt instrument are taxable (deductible) only when
realised. The gains (losses) arising on the sale or maturity of the debt
instrument are calculated for tax purposes as the difference between the
amount collected and the original cost of the debt instrument.
Accordingly, the tax base of the debt instrument is its original cost.
The difference between the carrying amount of the debt instrument in Entity A’s
statement of financial position of CU918 and its tax base of CU1,000 gives rise to a
deductible temporary difference of CU82 at the end of Year 2 (see paragraphs 20 and
26(d)), irrespective of whether Entity A expects to recover the carrying amount of the
debt instrument by sale or by use, ie by holding it and collecting contractual cash flows,
or a combination of both.
This is because deductible temporary differences are differences between the carrying
amount of an asset or liability in the statement of financial position and its tax base
that will result in amounts that are deductible in determining taxable profit (tax loss) of
future periods, when the carrying amount of the asset or liability is recovered or settled
(see paragraph 5). Entity A obtains a deduction equivalent to the tax base of the asset of
CU1,000 in determining taxable profit (tax loss) either on sale or on maturity.
The reversal of deductible temporary differences results in deductions in
determining taxable profits of future periods. However, economic benefits in
the form of reductions in tax payments will flow to the entity only if it earns
sufficient taxable profits against which the deductions can be offset.
Therefore, an entity recognises deferred tax assets only when it is probable
that taxable profits will be available against which the deductible temporary
differences can be utilised.
When an entity assesses whether taxable profits will be available against
which it can utilise a deductible temporary difference, it considers whether
tax law restricts the sources of taxable profits against which it may make
deductions on the reversal of that deductible temporary difference. If tax law
imposes no such restrictions, an entity assesses a deductible temporary
difference in combination with all of its other deductible temporary
differences. However, if tax law restricts the utilisation of losses to deduction
against income of a specific type, a deductible temporary difference is assessed
in combination only with other deductible temporary differences of the
appropriate type.

It is probable that taxable profit will be available against which a deductible
temporary difference can be utilized when there are sufficient taxable
temporary differences relating to the same taxation authority and the same
taxable entity which are expected to reverse:
(a) in the same period as the expected reversal of the deductible
temporary difference; or
(b) in periods into which a tax loss arising from the deferred tax asset can
be carried back or forward.
In such circumstances, the deferred tax asset is recognized in the period in
which the deductible temporary differences arise.
When there are insufficient taxable temporary differences relating to the
same taxation authority and the same taxable entity, the deferred tax asset is
recognized to the extent that:
(a) it is probable that the entity will have sufficient taxable profit relating
to the same taxation authority and the same taxable entity in the same
period as the reversal of the deductible temporary difference (or in the
periods into which a tax loss arising from the deferred tax asset can be
carried back or forward). In evaluating whether it will have sufficient
taxable profit in future periods, an entity:
(i) compares the deductible temporary differences with future
taxable profit that excludes tax deductions resulting from the
reversal of those deductible temporary differences. This
comparison shows the extent to which the future taxable profit
is sufficient for the entity to deduct the amounts resulting from
the reversal of those deductible temporary differences; and
(ii) ignores taxable amounts arising from deductible temporary
differences that are expected to originate in future periods,
because the deferred tax asset arising from these deductible
temporary differences will itself require future taxable profit in
order to be utilized; or

(b) tax planning opportunities are available to the entity that will create
taxable profit in appropriate periods.
The estimate of probable future taxable profit may include the recovery of
some of an entity’s assets for more than their carrying amount if there is
sufficient evidence that it is probable that the entity will achieve this. For
example, when an asset is measured at fair value, the entity shall consider
whether there is sufficient evidence to conclude that it is probable that the
entity will recover the asset for more than its carrying amount. This may be
the case, for example, when an entity expects to hold a fixed-rate debt
instrument and collect the contractual cash flows.
Tax planning opportunities are actions that the entity would take in order to
create or increase taxable income in a particular period before the expiry of a
tax loss or tax credit carryforward. For example, in some jurisdictions, taxable
profit may be created or increased by:

(a) electing to have interest income taxed on either a received or
receivable basis;
(b) deferring the claim for certain deductions from taxable profit;
(c) selling, and perhaps leasing back, assets that have appreciated but for
which the tax base has not been adjusted to reflect such appreciation;
and
(d) selling an asset that generates non-taxable income (such as, in some
jurisdictions, a government bond) in order to purchase another
investment that generates taxable income.
Where tax planning opportunities advance taxable profit from a later period
to an earlier period, the utilization of a tax loss or tax credit carryforward still
depends on the existence of future taxable profit from sources other than
future originating temporary differences.
When an entity has a history of recent losses, the entity considers the
guidance in paragraphs 35 and 36.
[Deleted]
Goodwill
If the carrying amount of goodwill arising in a business combination is less
than its tax base, the difference gives rise to a deferred tax asset. The deferred
tax asset arising from the initial recognition of goodwill shall be recognized as
part of the accounting for a business combination to the extent that it is
probable that taxable profit will be available against which the deductible
temporary difference could be utilized.

Initial recognition of an asset or liability

One case when a deferred tax asset arises on initial recognition of an asset is
when a non-taxable government grant related to an asset is deducted in
arriving at the carrying amount of the asset but, for tax purposes, is not
deducted from the asset’s depreciable amount (in other words its tax base); the
carrying amount of the asset is less than its tax base and this gives rise to a
deductible temporary difference. Government grants may also be set up as
deferred income in which case the difference between the deferred income
and its tax base of nil is a deductible temporary difference. Whichever method
of presentation an entity adopts, the entity does not recognise the resulting
deferred tax asset, for the reason given in paragraph 22.

Unused tax losses and unused tax credits

A deferred tax asset shall be recognised for the carryforward of unused tax
losses and unused tax credits to the extent that it is probable that future
taxable profit will be available against which the unused tax losses and
unused tax credits can be utilised.

The criteria for recognizing deferred tax assets arising from the carryforward
of unused tax losses and tax credits are the same as the criteria for recognizing
deferred tax assets arising from deductible temporary differences. However,
the existence of unused tax losses is strong evidence that future taxable profit
may not be available. Therefore, when an entity has a history of recent losses,
the entity recognizes a deferred tax asset arising from unused tax losses or tax
credits only to the extent that the entity has sufficient taxable temporary
differences or there is convincing other evidence that sufficient taxable profit
will be available against which the unused tax losses or unused tax credits can
be utilized by the entity. In such circumstances, paragraph 82 requires
disclosure of the amount of the deferred tax asset and the nature of the
evidence supporting its recognition.
An entity considers the following criteria in assessing the probability that
taxable profit will be available against which the unused tax losses or unused
tax credits can be utilized:
(a) whether the entity has sufficient taxable temporary differences
relating to the same taxation authority and the same taxable entity,
which will result in taxable amounts against which the unused tax
losses or unused tax credits can be utilized before they expire;
(b) whether it is probable that the entity will have taxable profits before
the unused tax losses or unused tax credits expire;
(c) whether the unused tax losses result from identifiable causes which
are unlikely to recur; and
(d) whether tax planning opportunities (see paragraph 30) are available to
the entity that will create taxable profit in the period in which the
unused tax losses or unused tax credits can be utilized.
To the extent that it is not probable that taxable profit will be available
against which the unused tax losses or unused tax credits can be utilized, the
deferred tax asset is not recognized.

Reassessment of unrecognized deferred tax assets

At the end of each reporting period, an entity reassesses unrecognized
deferred tax assets. The entity recognises a previously unrecognised deferred
tax asset to the extent that it has become probable that future taxable profit
will allow the deferred tax asset to be recovered. For example, an
improvement in trading conditions may make it more probable that the entity
will be able to generate sufficient taxable profit in the future for the deferred
tax asset to meet the recognition criteria set out in paragraph 24 or 34.
Another example is when an entity reassesses deferred tax assets at the date of
a business combination or subsequently (see paragraphs 67 and 68).

Investments in subsidiaries, branches and associates and
interests in joint arrangements

Temporary differences arise when the carrying amount of investments in
subsidiaries, branches and associates or interests in joint arrangements
(namely the parent or investor’s share of the net assets of the subsidiary,
branch, associate or investee, including the carrying amount of goodwill)
becomes different from the tax base (which is often cost) of the investment or
interest. Such differences may arise in a number of different circumstances,
for example:
(a) the existence of undistributed profits of subsidiaries, branches,
associates and joint arrangements;
(b) changes in foreign exchange rates when a parent and its subsidiary are
based in different countries; and
(c) a reduction in the carrying amount of an investment in an associate to
its recoverable amount.
In consolidated financial statements, the temporary difference may be
different from the temporary difference associated with that investment in
the parent’s separate financial statements if the parent carries the investment
in its separate financial statements at cost or revalued amount.
An entity shall recognise a deferred tax liability for all taxable temporary
differences associated with investments in subsidiaries, branches and
associates, and interests in joint arrangements, except to the extent that
both of the following conditions are satisfied:
(a) the parent, investor, joint venturer or joint operator is able to
control the timing of the reversal of the temporary difference; and
(b) it is probable that the temporary difference will not reverse in the
foreseeable future.
As a parent controls the dividend policy of its subsidiary, it is able to control
the timing of the reversal of temporary differences associated with that
investment (including the temporary differences arising not only from
undistributed profits but also from any foreign exchange translation
differences). Furthermore, it would often be impracticable to determine the
amount of income taxes that would be payable when the temporary difference
reverses. Therefore, when the parent has determined that those profits will
not be distributed in the foreseeable future the parent does not recognise a
deferred tax liability. The same considerations apply to investments in
branches.
The non-monetary assets and liabilities of an entity are measured in its
functional currency (see IAS 21 The Effects of Changes in Foreign Exchange Rates). If
the entity’s taxable profit or tax loss (and, hence, the tax base of its
non-monetary assets and liabilities) is determined in a different currency,
changes in the exchange rate give rise to temporary differences that result in a
recognised deferred tax liability or (subject to paragraph 24) asset. The resulting deferred tax is charged or credited to profit or loss (see
paragraph 58).
An investor in an associate does not control that entity and is usually not in a
position to determine its dividend policy. Therefore, in the absence of an
agreement requiring that the profits of the associate will not be distributed in
the foreseeable future, an investor recognises a deferred tax liability arising
from taxable temporary differences associated with its investment in the
associate. In some cases, an investor may not be able to determine the amount
of tax that would be payable if it recovers the cost of its investment in an
associate, but can determine that it will equal or exceed a minimum amount.
In such cases, the deferred tax liability is measured at this amount.
The arrangement between the parties to a joint arrangement usually deals
with the distribution of the profits and identifies whether decisions on such
matters require the consent of all the parties or a group of the parties. When
the joint venturer or joint operator can control the timing of the distribution
of its share of the profits of the joint arrangement and it is probable that its
share of the profits will not be distributed in the foreseeable future, a deferred
tax liability is not recognised.
An entity shall recognise a deferred tax asset for all deductible temporary
differences arising from investments in subsidiaries, branches and
associates, and interests in joint arrangements, to the extent that, and only
to the extent that, it is probable that:
(a) the temporary difference will reverse in the foreseeable future; and
(b) taxable profit will be available against which the temporary
difference can be utilised.
In deciding whether a deferred tax asset is recognised for deductible
temporary differences associated with its investments in subsidiaries,
branches and associates, and its interests in joint arrangements, an entity
considers the guidance set out in paragraphs 28 to 31.

Measurement

Current tax liabilities (assets) for the current and prior periods shall be
measured at the amount expected to be paid to (recovered from) the
taxation authorities, using the tax rates (and tax laws) that have been
enacted or substantively enacted by the end of the reporting period.
Deferred tax assets and liabilities shall be measured at the tax rates that
are expected to apply to the period when the asset is realised or the
liability is settled, based on tax rates (and tax laws) that have been enacted
or substantively enacted by the end of the reporting period.
Current and deferred tax assets and liabilities are usually measured using the
tax rates (and tax laws) that have been enacted. However, in some
jurisdictions, announcements of tax rates (and tax laws) by the government
have the substantive effect of actual enactment, which may follow the
announcement by a period of several months. In these circumstances, tax assets and liabilities are measured using the announced tax rate (and tax
laws).
When different tax rates apply to different levels of taxable income, deferred
tax assets and liabilities are measured using the average rates that are
expected to apply to the taxable profit (tax loss) of the periods in which the
temporary differences are expected to reverse.
[Deleted]
The measurement of deferred tax liabilities and deferred tax assets shall
reflect the tax consequences that would follow from the manner in which
the entity expects, at the end of the reporting period, to recover or settle
the carrying amount of its assets and liabilities.
In some jurisdictions, the manner in which an entity recovers (settles) the
carrying amount of an asset (liability) may affect either or both of:
(a) the tax rate applicable when the entity recovers (settles) the carrying
amount of the asset (liability); and
(b) the tax base of the asset (liability).
In such cases, an entity measures deferred tax liabilities and deferred tax
assets using the tax rate and the tax base that are consistent with the expected
manner of recovery or settlement.

Example A

An item of property, plant and equipment has a carrying amount of 100 and
a tax base of 60. A tax rate of 20% would apply if the item were sold and a
tax rate of 30% would apply to other income.
The entity recognises a deferred tax liability of 8 (40 at 20%) if it expects to sell the item
without further use and a deferred tax liability of 12 (40 at 30%) if it expects to retain
the item and recover its carrying amount through use.

Example B

An item or property, plant and equipment with a cost of 100 and a carrying
amount of 80 is revalued to 150. No equivalent adjustment is made for tax
purposes. Cumulative depreciation for tax purposes is 30 and the tax rate is
30%. If the item is sold for more than cost, the cumulative tax depreciation
of 30 will be included in taxable income but sale proceeds in excess of cost
will not be taxable.
The tax base of the item is 70 and there is a taxable temporary difference of 80. If the
entity expects to recover the carrying amount by using the item, it must generate
taxable income of 150, but will only be able to deduct depreciation of 70. On this basis,
there is a deferred tax liability of 24 (80 at 30%). If the entity expects to recover the
carrying amount by selling the item immediately for proceeds of 150, the deferred tax
liability is computed as follows:

Example B

Taxable
Temporary
Difference

Tax Rate Deferred

Tax Liability

Cumulative tax depreciation 30 30% 9
Proceeds in excess of cost 50 nil –
Total 80 9
(note: in accordance with paragraph 61A, the additional deferred tax that arises on the
revaluation is recognized in other comprehensive income)

Example C

The facts are as in example B, except that if the item is sold for more than
cost, the cumulative tax depreciation will be included in taxable income
(taxed at 30%) and the sale proceeds will be taxed at 40%, after deducting an
inflation-adjusted cost of 110.
If the entity expects to recover the carrying amount by using the item, it must generate
taxable income of 150, but will only be able to deduct depreciation of 70. On this basis,
the tax base is 70, there is a taxable temporary difference of 80 and there is a deferred
tax liability of 24 (80 at 30%), as in example B.
If the entity expects to recover the carrying amount by selling the item immediately for
proceeds of 150, the entity will be able to deduct the indexed cost of 110. The net
proceeds of 40 will be taxed at 40%. In addition, the cumulative tax depreciation of 30
will be included in taxable income and taxed at 30%. On this basis, the tax base is 80
(110 less 30), there is a taxable temporary difference of 70 and there is a deferred tax
liability of 25 (40 at 40% plus 30 at 30%). If the tax base is not immediately apparent
in this example, it may be helpful to consider the fundamental principle set out
in paragraph 10.
(note: in accordance with paragraph 61A, the additional deferred tax that arises on the
revaluation is recognised in other comprehensive income)
If a deferred tax liability or deferred tax asset arises from a non-depreciable
asset measured using the revaluation model in IAS 16, the measurement of
the deferred tax liability or deferred tax asset shall reflect the tax
consequences of recovering the carrying amount of the non-depreciable asset
through sale, regardless of the basis of measuring the carrying amount of that
asset. Accordingly, if the tax law specifies a tax rate applicable to the taxable
amount derived from the sale of an asset that differs from the tax rate
applicable to the taxable amount derived from using an asset, the former rate
is applied in measuring the deferred tax liability or asset related to a
non-depreciable asset.

If a deferred tax liability or asset arises from investment property that is
measured using the fair value model in IAS 40, there is a rebuttable
presumption that the carrying amount of the investment property will be
recovered through sale. Accordingly, unless the presumption is rebutted, the
measurement of the deferred tax liability or deferred tax asset shall reflect the
tax consequences of recovering the carrying amount of the investment
property entirely through sale. This presumption is rebutted if the investment
property is depreciable and is held within a business model whose objective is
to consume substantially all of the economic benefits embodied in the
investment property over time, rather than through sale. If the presumption
is rebutted, the requirements of paragraphs 51 and 51A shall be followed.

Example illustrating paragraph 51C

An investment property has a cost of 100 and fair value of 150. It is
measured using the fair value model in IAS 40. It comprises land with a cost
of 40 and fair value of 60 and a building with a cost of 60 and fair value of
90. The land has an unlimited useful life.
Cumulative depreciation of the building for tax purposes is 30. Unrealised
changes in the fair value of the investment property do not affect taxable
profit. If the investment property is sold for more than cost, the reversal of
the cumulative tax depreciation of 30 will be included in taxable profit and
taxed at an ordinary tax rate of 30%. For sales proceeds in excess of cost, tax
law specifies tax rates of 25% for assets held for less than two years and 20%
for assets held for two years or more.
Because the investment property is measured using the fair value model in IAS 40, there
is a rebuttable presumption that the entity will recover the carrying amount of the
investment property entirely through sale. If that presumption is not rebutted, the
deferred tax reflects the tax consequences of recovering the carrying amount entirely
through sale, even if the entity expects to earn rental income from the property before
sale.
The tax base of the land if it is sold is 40 and there is a taxable temporary difference of
20 (60 – 40). The tax base of the building if it is sold is 30 (60 – 30) and there is a
taxable temporary difference of 60 (90 – 30). As a result, the total taxable temporary
difference relating to the investment property is 80 (20 + 60).
In accordance with paragraph 47, the tax rate is the rate expected to apply to the
period when the investment property is realised. Thus, the resulting deferred tax
liability is computed as follows, if the entity expects to sell the property after holding it
for more than two years:

Taxable
Temporary
Difference

Tax Rate Deferred
Tax Liability
Cumulative tax depreciation 30 30% 9
Proceeds in excess of cost 50 20% 10
Total 80 19

Example illustrating paragraph 51C

If the entity expects to sell the property after holding it for less than two years, the above
computation would be amended to apply a tax rate of 25%, rather than 20%, to the
proceeds in excess of cost.
If, instead, the entity holds the building within a business model whose objective is to
consume substantially all of the economic benefits embodied in the building over time,
rather than through sale, this presumption would be rebutted for the building.
However, the land is not depreciable. Therefore the presumption of recovery through
sale would not be rebutted for the land. It follows that the deferred tax liability would
reflect the tax consequences of recovering the carrying amount of the building through
use and the carrying amount of the land through sale.
The tax base of the building if it is used is 30 (60 – 30) and there is a taxable
temporary difference of 60 (90 – 30), resulting in a deferred tax liability of 18 (60 at
30%).
The tax base of the land if it is sold is 40 and there is a taxable temporary difference of
20 (60 – 40), resulting in a deferred tax liability of 4 (20 at 20%).
As a result, if the presumption of recovery through sale is rebutted for the building, the
deferred tax liability relating to the investment property is 22 (18 + 4).
The rebuttable presumption in paragraph 51C also applies when a deferred
tax liability or a deferred tax asset arises from measuring investment property
in a business combination if the entity will use the fair value model when
subsequently measuring that investment property.
Paragraphs 51B–51D do not change the requirements to apply the principles
in paragraphs 24–33 (deductible temporary differences) and paragraphs 34–36
(unused tax losses and unused tax credits) of this Standard when recognising
and measuring deferred tax assets.
[moved and renumbered 51A]
In some jurisdictions, income taxes are payable at a higher or lower rate if
part or all of the net profit or retained earnings is paid out as a dividend to
shareholders of the entity. In some other jurisdictions, income taxes may be
refundable or payable if part or all of the net profit or retained earnings is
paid out as a dividend to shareholders of the entity. In these circumstances,
current and deferred tax assets and liabilities are measured at the tax rate
applicable to undistributed profits.
[Deleted]

Example illustrating paragraphs 52A and 57A

The following example deals with the measurement of current and deferred tax assets
and liabilities for an entity in a jurisdiction where income taxes are payable at a higher
rate on undistributed profits (50%) with an amount being refundable when profits are
distributed. The tax rate on distributed profits is 35%. At the end of the reporting
period, 31 December 20X1, the entity does not recognise a liability for dividends
proposed or declared after the reporting period. As a result, no dividends are recognised
in the year 20X1. Taxable income for 20X1 is 100,000. The net taxable temporary
difference for the year 20X1 is 40,000.
The entity recognises a current tax liability and a current income tax expense of 50,000. No asset is
recognised for the amount potentially recoverable as a result of future dividends. The entity also
recognises a deferred tax liability and deferred tax expense of 20,000 (40,000 at 50%) representing
the income taxes that the entity will pay when it recovers or settles the carrying amounts of its assets
and liabilities based on the tax rate applicable to undistributed profits.
Subsequently, on 15 March 20X2 the entity recognises dividends of 10,000 from
previous operating profits as a liability.
On 15 March 20X2, the entity recognises the recovery of income taxes of 1,500 (15% of the
dividends recognised as a liability) as a current tax asset and as a reduction of current income tax
expense for 20X2.
Deferred tax assets and liabilities shall not be discounted.
The reliable determination of deferred tax assets and liabilities on a
discounted basis requires detailed scheduling of the timing of the reversal of
each temporary difference. In many cases such scheduling is impracticable or
highly complex. Therefore, it is inappropriate to require discounting of
deferred tax assets and liabilities. To permit, but not to require, discounting
would result in deferred tax assets and liabilities which would not be
comparable between entities. Therefore, this Standard does not require or
permit the discounting of deferred tax assets and liabilities.
Temporary differences are determined by reference to the carrying amount of
an asset or liability. This applies even where that carrying amount is itself
determined on a discounted basis, for example in the case of retirement
benefit obligations (see IAS 19 Employee Benefits).
The carrying amount of a deferred tax asset shall be reviewed at the end of
each reporting period. An entity shall reduce the carrying amount of a
deferred tax asset to the extent that it is no longer probable that sufficient
taxable profit will be available to allow the benefit of part or all of that
deferred tax asset to be utilised. Any such reduction shall be reversed to
the extent that it becomes probable that sufficient taxable profit will be
available.

Recognition of current and deferred tax

Accounting for the current and deferred tax effects of a transaction or other
event is consistent with the accounting for the transaction or event itself.
Paragraphs 58 to 68C implement this principle.
An entity shall recognise the income tax consequences of dividends as defined
in IFRS 9 when it recognises a liability to pay a dividend. The income tax
consequences of dividends are linked more directly to past transactions or
events that generated distributable profits than to distributions to owners.
Therefore, an entity shall recognise the income tax consequences of dividends
in profit or loss, other comprehensive income or equity according to where
the entity originally recognized those past transactions or events.

Items recognised in profit or loss

Current and deferred tax shall be recognized as income or an expense and
included in profit or loss for the period, except to the extent that the tax
arises from:
(a) a transaction or event which is recognised, in the same or a
different period, outside profit or loss, either in other
comprehensive income or directly in equity (see paragraphs 61A–65);
or
(b) a business combination (other than the acquisition by an investment
entity, as defined in IFRS 10 Consolidated Financial Statements, of a
subsidiary that is required to be measured at fair value through
profit or loss) (see paragraphs 66–68).
Most deferred tax liabilities and deferred tax assets arise where income or
expense is included in accounting profit in one period, but is included in
taxable profit (tax loss) in a different period. The resulting deferred tax is
recognised in profit or loss. Examples are when:
(a) interest, royalty or dividend revenue is received in arrears and is
included in accounting profit in accordance with IFRS 15 Revenue from
Contracts with Customers, IAS 39 Financial Instruments: Recognition and
Measurement or IFRS 9 Financial Instruments, as relevant, but is included
in taxable profit (tax loss) on a cash basis; and
(b) costs of intangible assets have been capitalised in accordance with
IAS 38 and are being amortised in profit or loss, but were deducted for
tax purposes when they were incurred.
The carrying amount of deferred tax assets and liabilities may change even
though there is no change in the amount of the related temporary differences.
This can result, for example, from:
(a) a change in tax rates or tax laws;
(b) a reassessment of the recoverability of deferred tax assets; or
(c) a change in the expected manner of recovery of an asset.

The resulting deferred tax is recognized in profit or loss, except to the extent
that it relates to items previously recognized outside profit or loss (see
paragraph 63).

Items recognized outside profit or loss

[Deleted]
Current tax and deferred tax shall be recognized outside profit or loss if
the tax relates to items that are recognized, in the same or a different
period, outside profit or loss. Therefore, current tax and deferred tax that
relates to items that are recognised, in the same or a different period:
(a) in other comprehensive income, shall be recognised in other
comprehensive income (see paragraph 62).
(b) directly in equity, shall be recognised directly in equity (see
paragraph 62A).
International Financial Reporting Standards require or permit particular items
to be recognised in other comprehensive income. Examples of such items are:
(a) a change in carrying amount arising from the revaluation of property,
plant and equipment (see IAS 16); and
(b) [deleted]
(c) exchange differences arising on the translation of the financial
statements of a foreign operation (see IAS 21).
(d) [deleted]
International Financial Reporting Standards require or permit particular items
to be credited or charged directly to equity. Examples of such items are:
(a) an adjustment to the opening balance of retained earnings resulting
from either a change in accounting policy that is applied
retrospectively or the correction of an error (see IAS 8 Accounting
Policies, Changes in Accounting Estimates and Errors); and
(b) amounts arising on initial recognition of the equity component of a
compound financial instrument (see paragraph 23).
In exceptional circumstances it may be difficult to determine the amount of
current and deferred tax that relates to items recognised outside profit or loss
(either in other comprehensive income or directly in equity). This may be the
case, for example, when:
(a) there are graduated rates of income tax and it is impossible to
determine the rate at which a specific component of taxable profit (tax
loss) has been taxed;
(b) a change in the tax rate or other tax rules affects a deferred tax
asset or liability relating (in whole or in part) to an item that was
previously recognised outside profit or loss; or

(c) an entity determines that a deferred tax asset should be recognised, or
should no longer be recognised in full, and the deferred tax asset
relates (in whole or in part) to an item that was previously recognised
outside profit or loss.
In such cases, the current and deferred tax related to items that are
recognised outside profit or loss are based on a reasonable pro rata allocation
of the current and deferred tax of the entity in the tax jurisdiction concerned,
or other method that achieves a more appropriate allocation in the
circumstances.
IAS 16 does not specify whether an entity should transfer each year from
revaluation surplus to retained earnings an amount equal to the difference
between the depreciation or amortisation on a revalued asset and the
depreciation or amortisation based on the cost of that asset. If an entity makes
such a transfer, the amount transferred is net of any related deferred tax.
Similar considerations apply to transfers made on disposal of an item of
property, plant or equipment.
When an asset is revalued for tax purposes and that revaluation is related to
an accounting revaluation of an earlier period, or to one that is expected to be
carried out in a future period, the tax effects of both the asset revaluation and
the adjustment of the tax base are recognised in other comprehensive income
in the periods in which they occur. However, if the revaluation for tax
purposes is not related to an accounting revaluation of an earlier period, or to
one that is expected to be carried out in a future period, the tax effects of the
adjustment of the tax base are recognised in profit or loss.
When an entity pays dividends to its shareholders, it may be required to pay a
portion of the dividends to taxation authorities on behalf of shareholders.
In many jurisdictions, this amount is referred to as a withholding tax. Such an
amount paid or payable to taxation authorities is charged to equity as a part of
the dividends.

Deferred tax arising from a business combination

As explained in paragraphs 19 and 26(c), temporary differences may arise in a
business combination. In accordance with IFRS 3, an entity recognises any
resulting deferred tax assets (to the extent that they meet the recognition
criteria in paragraph 24) or deferred tax liabilities as identifiable assets and
liabilities at the acquisition date. Consequently, those deferred tax assets and
deferred tax liabilities affect the amount of goodwill or the bargain purchase
gain the entity recognises. However, in accordance with paragraph 15(a), an
entity does not recognise deferred tax liabilities arising from the initial
recognition of goodwill.
As a result of a business combination, the probability of realising a
pre-acquisition deferred tax asset of the acquirer could change. An acquirer
may consider it probable that it will recover its own deferred tax asset that
was not recognised before the business combination. For example, the
acquirer may be able to utilise the benefit of its unused tax losses against the
future taxable profit of the acquiree. Alternatively, as a result of the business combination it might no longer be probable that future taxable profit will
allow the deferred tax asset to be recovered. In such cases, the acquirer
recognises a change in the deferred tax asset in the period of the business
combination, but does not include it as part of the accounting for the business
combination. Therefore, the acquirer does not take it into account in
measuring the goodwill or bargain purchase gain it recognises in the business
combination.
The potential benefit of the acquiree’s income tax loss carryforwards or other
deferred tax assets might not satisfy the criteria for separate recognition when
a business combination is initially accounted for but might be realized
subsequently. An entity shall recognize acquired deferred tax benefits that it
realizes after the business combination as follows:
(a) Acquired deferred tax benefits recognized within the measurement
period that result from new information about facts and
circumstances that existed at the acquisition date shall be applied to
reduce the carrying amount of any goodwill related to that acquisition.
If the carrying amount of that goodwill is zero, any remaining deferred
tax benefits shall be recognized in profit or loss.
(b) All other acquired deferred tax benefits realized shall be recognized in
profit or loss (or, if this Standard so requires, outside profit or loss).

Current and deferred tax arising from share-based
payment transactions

In some tax jurisdictions, an entity receives a tax deduction (ie an amount that
is deductible in determining taxable profit) that relates to remuneration paid
in shares, share options or other equity instruments of the entity. The amount
of that tax deduction may differ from the related cumulative remuneration
expense, and may arise in a later accounting period. For example, in some
jurisdictions, an entity may recognize an expense for the consumption of
employee services received as consideration for share options granted, in
accordance with IFRS 2 Share-based Payment, and not receive a tax deduction
until the share options are exercised, with the measurement of the tax
deduction based on the entity’s share price at the date of exercise.
As with the research costs discussed in paragraphs 9 and 26(b) of this
Standard, the difference between the tax base of the employee services
received to date (being the amount the taxation authorities will permit as a
deduction in future periods), and the carrying amount of nil, is a deductible
temporary difference that results in a deferred tax asset. If the amount the
taxation authorities will permit as a deduction in future periods is not known
at the end of the period, it shall be estimated, based on information available
at the end of the period. For example, if the amount that the taxation
authorities will permit as a deduction in future periods is dependent upon the
entity’s share price at a future date, the measurement of the deductible
temporary difference should be based on the entity’s share price at the end of
the period.

As noted in paragraph 68A, the amount of the tax deduction (or estimated
future tax deduction, measured in accordance with paragraph 68B) may differ
from the related cumulative remuneration expense. Paragraph 58 of the
Standard requires that current and deferred tax should be recognized as
income or an expense and included in profit or loss for the period, except to
the extent that the tax arises from (a) a transaction or event that is recognized,
in the same or a different period, outside profit or loss, or (b) a business
combination (other than the acquisition by an investment entity of a
subsidiary that is required to be measured at fair value through profit or loss).
If the amount of the tax deduction (or estimated future tax deduction) exceeds
the amount of the related cumulative remuneration expense, this indicates
that the tax deduction relates not only to remuneration expense but also to an
equity item. In this situation, the excess of the associated current or deferred
tax should be recognized directly in equity.
Presentation

Tax assets and tax liabilities

[Deleted]

Offset

An entity shall offset current tax assets and current tax liabilities if, and
only if, the entity:
(a) has a legally enforceable right to set off the recognized amounts;
and
(b) intends either to settle on a net basis, or to realize the asset and
settle the liability simultaneously.
Although current tax assets and liabilities are separately recognized and
measured they are offset in the statement of financial position subject to
criteria similar to those established for financial instruments in IAS 32. An
entity will normally have a legally enforceable right to set off a current tax
asset against a current tax liability when they relate to income taxes levied by
the same taxation authority and the taxation authority permits the entity to
make or receive a single net payment.
In consolidated financial statements, a current tax asset of one entity in a
group is offset against a current tax liability of another entity in the group if,
and only if, the entities concerned have a legally enforceable right to make or
receive a single net payment and the entities intend to make or receive such a
net payment or to recover the asset and settle the liability simultaneously.
An entity shall offset deferred tax assets and deferred tax liabilities if, and
only if:
(a) the entity has a legally enforceable right to set off current tax assets
against current tax liabilities; and

(b) the deferred tax assets and the deferred tax liabilities relate to
income taxes levied by the same taxation authority on either:
(i) the same taxable entity; or
(ii) different taxable entities which intend either to settle
current tax liabilities and assets on a net basis, or to realize
the assets and settle the liabilities simultaneously, in each
future period in which significant amounts of deferred tax
liabilities or assets are expected to be settled or recovered.
To avoid the need for detailed scheduling of the timing of the reversal of each
temporary difference, this Standard requires an entity to set off a deferred tax
asset against a deferred tax liability of the same taxable entity if, and only if,
they relate to income taxes levied by the same taxation authority and the
entity has a legally enforceable right to set off current tax assets against
current tax liabilities.
In rare circumstances, an entity may have a legally enforceable right of set-off,
and an intention to settle net, for some periods but not for others. In such rare
circumstances, detailed scheduling may be required to establish reliably
whether the deferred tax liability of one taxable entity will result in increased
tax payments in the same period in which a deferred tax asset of another
taxable entity will result in decreased payments by that second taxable entity.

Tax expense
Tax expense (income) related to profit or loss from ordinary
activities

The tax expense (income) related to profit or loss from ordinary activities
shall be presented as part of profit or loss in the statement(s) of profit or
loss and other comprehensive income.
[Deleted]

Exchange differences on deferred foreign tax liabilities or assets

IAS 21 requires certain exchange differences to be recognized as income or
expense but does not specify where such differences should be presented in
the statement of comprehensive income. Accordingly, where exchange
differences on deferred foreign tax liabilities or assets are recognized in the
statement of comprehensive income, such differences may be classified as
deferred tax expense (income) if that presentation is considered to be the most
useful to financial statement users.

Disclosure

The major components of tax expense (income) shall be disclosed
separately.
Components of tax expense (income) may include:
(a) current tax expense (income);

(b) any adjustments recognized in the period for current tax of prior
periods;
(c) the amount of deferred tax expense (income) relating to the
origination and reversal of temporary differences;
(d) the amount of deferred tax expense (income) relating to changes in tax
rates or the imposition of new taxes;
(e) the amount of the benefit arising from a previously unrecognized tax
loss, tax credit or temporary difference of a prior period that is used to
reduce current tax expense;
(f) the amount of the benefit from a previously unrecognized tax loss, tax
credit or temporary difference of a prior period that is used to reduce
deferred tax expense;
(g) deferred tax expense arising from the write-down, or reversal of a
previous write-down, of a deferred tax asset in accordance with
paragraph 56; and
(h) the amount of tax expense (income) relating to those changes in
accounting policies and errors that are included in profit or loss in
accordance with IAS 8, because they cannot be accounted for
retrospectively.
The following shall also be disclosed separately:
(a) the aggregate current and deferred tax relating to items that are
charged or credited directly to equity (see paragraph 62A);
(ab) the amount of income tax relating to each component of other
comprehensive income (see paragraph 62 and IAS 1 (as revised in
2007));
(b) [deleted]
(c) an explanation of the relationship between tax expense (income)
and accounting profit in either or both of the following forms:
(i) a numerical reconciliation between tax expense (income) and
the product of accounting profit multiplied by the applicable
tax rate(s), disclosing also the basis on which the applicable
tax rate(s) is (are) computed; or
(ii) a numerical reconciliation between the average effective tax
rate and the applicable tax rate, disclosing also the basis on
which the applicable tax rate is computed;

(d) an explanation of changes in the applicable tax rate(s) compared to
the previous accounting period;
(e) the amount (and expiry date, if any) of deductible temporary
differences, unused tax losses, and unused tax credits for which no
deferred tax asset is recognized in the statement of financial
position;

(f) the aggregate amount of temporary differences associated with
investments in subsidiaries, branches and associates and interests in
joint arrangements, for which deferred tax liabilities have not been
recognized (see paragraph 39);
(g) in respect of each type of temporary difference, and in respect of
each type of unused tax losses and unused tax credits:
(i) the amount of the deferred tax assets and liabilities
recognized in the statement of financial position for each
period presented;
(ii) the amount of the deferred tax income or expense
recognized in profit or loss, if this is not apparent from the
changes in the amounts recognized in the statement of
financial position;

(h) in respect of discontinued operations, the tax expense relating to:
(i) the gain or loss on discontinuance; and
(ii) the profit or loss from the ordinary activities of the
discontinued operation for the period, together with the
corresponding amounts for each prior period presented;
(i) the amount of income tax consequences of dividends to
shareholders of the entity that were proposed or declared before
the financial statements were authorized for issue, but are not
recognized as a liability in the financial statements;
(j) if a business combination in which the entity is the acquirer causes
a change in the amount recognized for its pre-acquisition deferred
tax asset (see paragraph 67), the amount of that change; and
(k) if the deferred tax benefits acquired in a business combination are
not recognized at the acquisition date but are recognized after the
acquisition date (see paragraph 68), a description of the event or
change in circumstances that caused the deferred tax benefits to be
recognized.
An entity shall disclose the amount of a deferred tax asset and the nature
of the evidence supporting its recognition, when:
(a) the utilization of the deferred tax asset is dependent on future
taxable profits in excess of the profits arising from the reversal of
existing taxable temporary differences; and
(b) the entity has suffered a loss in either the current or preceding
period in the tax jurisdiction to which the deferred tax asset relates.
In the circumstances described in paragraph 52A, an entity shall disclose
the nature of the potential income tax consequences that would result
from the payment of dividends to its shareholders. In addition, the entity
shall disclose the amounts of the potential income tax consequences practicably determinable and whether there are any potential income tax
consequences not practicably determinable.
[Deleted]
The disclosures required by paragraph 81(c) enable users of financial
statements to understand whether the relationship between tax expense
(income) and accounting profit is unusual and to understand the significant
factors that could affect that relationship in the future. The relationship
between tax expense (income) and accounting profit may be affected by such
factors as revenue that is exempt from taxation, expenses that are not
deductible in determining taxable profit (tax loss), the effect of tax losses and
the effect of foreign tax rates.
In explaining the relationship between tax expense (income) and accounting
profit, an entity uses an applicable tax rate that provides the most meaningful
information to the users of its financial statements. Often, the most
meaningful rate is the domestic rate of tax in the country in which the entity
is domiciled, aggregating the tax rate applied for national taxes with the rates
applied for any local taxes which are computed on a substantially similar level
of taxable profit (tax loss). However, for an entity operating in several
jurisdictions, it may be more meaningful to aggregate separate reconciliations
prepared using the domestic rate in each individual jurisdiction. The following
example illustrates how the selection of the applicable tax rate affects the
presentation of the numerical reconciliation.

Example illustrating paragraph 85

In 19X2, an entity has accounting profit in its own jurisdiction (country A) of
1,500 (19X1: 2,000) and in country B of 1,500 (19X1: 500). The tax rate is 30%
in country A and 20% in country B. In country A, expenses of 100 (19X1:
200) are not deductible for tax purposes.
The following is an example of a reconciliation to the domestic tax rate.
19X1 19X2
Accounting profit 2,500 3,000
Tax at the domestic rate of 30% 750 900
Tax effect of expenses that are not deductible for tax
purposes 60 30
Effect of lower tax rates in country B (50) (150)
Tax expense 760 780

Example illustrating paragraph 85

The following is an example of a reconciliation prepared by aggregating separate

reconciliations for each national jurisdiction. Under this method, the effect of differences between the reporting entity’s own domestic tax rate and the domestic tax rate

in other jurisdictions does not appear as a separate item in the reconciliation. An
entity may need to discuss the effect of significant changes in either tax rates, or the
mix of profits earned in different jurisdictions, in order to explain changes in the
applicable tax rate(s), as required by paragraph 81(d).
Accounting profit 2,500 3,000
Tax at the domestic rates applicable to profits in the
country concerned 700 750
Tax effect of expenses that are not deductible for tax
purposes 60 30
Tax expense 760 780

The average effective tax rate is the tax expense (income) divided by the
accounting profit.
It would often be impracticable to compute the amount of unrecognized
deferred tax liabilities arising from investments in subsidiaries, branches and
associates and interests in joint arrangements (see paragraph 39). Therefore,
this Standard requires an entity to disclose the aggregate amount of the
underlying temporary differences but does not require disclosure of the
deferred tax liabilities. Nevertheless, where practicable, entities are
encouraged to disclose the amounts of the unrecognized deferred tax
liabilities because financial statement users may find such information useful.
Paragraph 82A requires an entity to disclose the nature of the potential
income tax consequences that would result from the payment of dividends to
its shareholders. An entity discloses the important features of the income tax
systems and the factors that will affect the amount of the potential income
tax consequences of dividends.
It would sometimes not be practicable to compute the total amount of the
potential income tax consequences that would result from the payment of
dividends to shareholders. This may be the case, for example, where an entity
has a large number of foreign subsidiaries. However, even in such
circumstances, some portions of the total amount may be easily determinable.
For example, in a consolidated group, a parent and some of its subsidiaries
may have paid income taxes at a higher rate on undistributed profits and be
aware of the amount that would be refunded on the payment of future
dividends to shareholders from consolidated retained earnings. In this case,
that refundable amount is disclosed. If applicable, the entity also discloses
that there are additional potential income tax consequences not practicably
determinable. In the parent’s separate financial statements, if any, the disclosure of the potential income tax consequences relates to the parent’s
retained earnings.
An entity required to provide the disclosures in paragraph 82A may also be
required to provide disclosures related to temporary differences associated
with investments in subsidiaries, branches and associates or interests in joint
arrangements. In such cases, an entity considers this in determining the
information to be disclosed under paragraph 82A. For example, an entity may
be required to disclose the aggregate amount of temporary differences
associated with investments in subsidiaries for which no deferred tax
liabilities have been recognized (see paragraph 81(f)). If it is impracticable to
compute the amounts of unrecognized deferred tax liabilities (see
paragraph 87) there may be amounts of potential income tax consequences of
dividends not practicably determinable related to these subsidiaries.
An entity discloses any tax-related contingent liabilities and contingent assets
in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets.
Contingent liabilities and contingent assets may arise, for example, from
unresolved disputes with the taxation authorities. Similarly, where changes in
tax rates or tax laws are enacted or announced after the reporting period, an
entity discloses any significant effect of those changes on its current and
deferred tax assets and liabilities (see IAS 10 Events after the Reporting Period).

Effective date

This Standard becomes operative for financial statements covering periods
beginning on or after 1 January 1998, except as specified in paragraph 91.
If an entity applies this Standard for financial statements covering periods
beginning before 1 January 1998, the entity shall disclose the fact it has
applied this Standard instead of IAS 12 Accounting for Taxes on Income, approved
in 1979.
This Standard supersedes IAS 12 Accounting for Taxes on Income, approved in
1979.
Paragraphs 52A, 52B, 65A, 81(i), 82A, 87A, 87B, 87C and the deletion of
paragraphs 3 and 50 become operative for annual financial statements1
covering periods beginning on or after 1 January 2001. Earlier adoption is
encouraged. If earlier adoption affects the financial statements, an entity shall
disclose that fact.
IAS 1 (as revised in 2007) amended the terminology used throughout IFRSs. In
addition it amended paragraphs 23, 52, 58, 60, 62, 63, 65, 68C, 77 and 81,
deleted paragraph 61 and added paragraphs 61A, 62A and 77A. An entity shall
apply those amendments for annual periods beginning on or after 1 January
2009. If an entity applies IAS 1 (revised 2007) for an earlier period, the
amendments shall be applied for that earlier period.

Paragraph 91 refers to ‘annual financial statements’ in line with more explicit language for
writing effective dates adopted in 1998. Paragraph 89 refers to ‘financial statements’.

Paragraph 68 shall be applied prospectively from the effective date of IFRS 3
(as revised in 2008) to the recognition of deferred tax assets acquired in
business combinations.
Therefore, entities shall not adjust the accounting for prior business
combinations if tax benefits failed to satisfy the criteria for separate
recognition as of the acquisition date and are recognized after the acquisition
date, unless the benefits are recognized within the measurement period and
result from new information about facts and circumstances that existed at the
acquisition date. Other tax benefits recognized shall be recognized in profit or
loss (or, if this Standard so requires, outside profit or loss).
IFRS 3 (as revised in 2008) amended paragraphs 21 and 67 and added
paragraphs 32A and 81(j) and (k). An entity shall apply those amendments for
annual periods beginning on or after 1 July 2009. If an entity applies IFRS 3
(revised 2008) for an earlier period, the amendments shall also be applied for
that earlier period.
[Deleted]
[Deleted]
Paragraph 52 was renumbered as 51A, paragraph 10 and the examples
following paragraph 51A were amended, and paragraphs 51B and 51C and the
following example and paragraphs 51D, 51E and 99 were added by Deferred
Tax: Recovery of Underlying Assets, issued in December 2010. An entity shall apply
those amendments for annual periods beginning on or after 1 January 2012.
Earlier application is permitted. If an entity applies the amendments for an
earlier period, it shall disclose that fact.
IFRS 11 Joint Arrangements, issued in May 2011, amended paragraphs 2, 15,
18(e), 24, 38, 39, 43–45, 81(f), 87 and 87C. An entity shall apply those
amendments when it applies IFRS 11.
Presentation of Items of Other Comprehensive Income (Amendments to IAS 1), issued
in June 2011, amended paragraph 77 and deleted paragraph 77A. An entity
shall apply those amendments when it applies IAS 1 as amended in June 2011.
Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27), issued in
October 2012, amended paragraphs 58 and 68C. An entity shall apply those
amendments for annual periods beginning on or after 1 January 2014. Earlier
application of Investment Entities is permitted. If an entity applies those
amendments earlier it shall also apply all amendments included in Investment
Entities at the same time.
[Deleted]
IFRS 15 Revenue from Contracts with Customers, issued in May 2014, amended
paragraph 59. An entity shall apply that amendment when it applies IFRS 15.
IFRS 9, as issued in July 2014, amended paragraph 20 and deleted
paragraphs 96, 97 and 98D. An entity shall apply those amendments when it
applies IFRS 9.

IFRS 16, issued in January 2016, amended paragraph 20. An entity shall apply
that amendment when it applies IFRS 16.
Recognition of Deferred Tax Assets for Unrealized Losses (Amendments to IAS 12),
issued in January 2016, amended paragraph 29 and added paragraphs 27A,
29A and the example following paragraph 26. An entity shall apply those
amendments for annual periods beginning on or after 1 January 2017. Earlier
application is permitted. If an entity applies those amendments for an earlier
period, it shall disclose that fact. An entity shall apply those amendments
retrospectively in accordance with IAS 8 Accounting Policies, Changes in
Accounting Estimates and Errors. However, on initial application of the
amendment, the change in the opening equity of the earliest comparative
period may be recognized in opening retained earnings (or in another
component of equity, as appropriate), without allocating the change between
opening retained earnings and other components of equity. If an entity applies
this relief, it shall disclose that fact.
Annual Improvements to IFRS Standards 2015–2017 Cycle, issued in December
2017, added paragraph 57A and deleted paragraph 52B. An entity shall apply
those amendments for annual reporting periods beginning on or after
1 January 2019. Earlier application is permitted. If an entity applies those
amendments earlier, it shall disclose that fact. When an entity first applies
those amendments, it shall apply them to the income tax consequences of
dividends recognized on or after the beginning of the earliest comparative
period.

Withdrawal of SIC-21

The amendments made by Deferred Tax: Recovery of Underlying Assets, issued in
December 2010, supersede SIC Interpretation 21 Income Taxes—Recovery of
Revalued Non-Depreciable Assets.

Approval by the Board of Deferred Tax: Recovery of Underlying
Assets (Amendments to IAS 12) issued in December 2010

Deferred Tax: Recovery of Underlying Assets (Amendments to IAS 12) was approved for
publication by the fifteen members of the International Accounting Standards Board.
Sir David Tweedie Chairman
Stephen Cooper
Philippe Danjou
Jan Engström
Patrick Finnegan
Amaro Luiz de Oliveira Gomes
Prabhakar Kalavacherla
Elke König
Patricia McConnell
Warren J McGregor
Paul Pacter
Darrel Scott
John T Smith
Tatsumi Yamada
Wei-Guo Zhang

Approval by the Board of Recognition of Deferred Tax Assets for
Unrealised Losses (Amendments to IAS 12) issued in January
2016

Recognition of Deferred Tax Assets for Unrealised Losses was approved for issue by the fourteen
members of the International Accounting Standards Board.
Hans Hoogervorst Chairman
Ian Mackintosh Vice-Chairman
Stephen Cooper
Philippe Danjou
Martin Edelmann
Patrick Finnegan
Amaro Gomes
Gary Kabureck
Suzanne Lloyd
Takatsugu Ochi
Darrel Scott
Chungwoo Suh
Mary Tokar
Wei-Guo Zhang