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Preparing your first IFRS based tax returns - Part 2

IFRS Watch - Issue 3


Unlike the NGAAP, IFRS provides for deferred tax accounting in consolidated accounts. The aim is to achieve consistency in consolidated tax balances as well as in individual company accounts. An entity should recognize 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:

  1. The parent, investor, joint venturer or joint operator is able to control the timing of the reversal of the temporary difference; and
  2. It is probable that the temporary difference will not reverse in the foreseeable future.

To this effect, all 'outside' and 'inside' basis must be recognized and accounted for appropriately.

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