Deferred tax and the framework

Paterson, Ron
July 2000
Accountancy;Jul2000, Vol. 126 Issue 1283, p108
Trade Publication
The same conceptual framework has produced different standards for deferred tax in different countries. U.S. Financial Accounting Standards Board, the Canadian Institute of Chartered Accountants and the International Accounting Standards Committee had all produced significantly different deferred tax standards, even though they had apparently been following the same framework. The present proposals for deferred tax in Great Britain are different again from any of these standards. Deferred tax is most easily explained as an application of the matching concept, whereby tax is matched across time periods time periods with the profits that give rise to it. However, the G4+1 frameworks have elevated balance sheet purity over matching, so that a deferred tax balance has to meet the definition of an asset or liability before it can be recognised. It is doubtful that it does meet these definitions. The only real world obligation, as far as tax is concerned, is that which is shown tax assessments, based on profits measured under the tax rules.


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