This free, guided checker walks your finance team through the key decision points for IAS 12 Current and Deferred Tax Presentation. Answer a few questions to see the likely treatment and the evidence to document.
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This tool is a high-level IFRS screening aid for general information only and is not accounting, audit or legal advice. Conclusions require entity-specific evidence and judgement - confirm the treatment with your advisor.
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IAS 1.54(n) and (o) make current tax and deferred tax separate minimum line items on the face of the statement of financial position; they are different balances measured under different IAS 12 principles. Netting between the two categories is never permitted - the IAS 12.71 and IAS 12.74 offsetting rules operate only within each category. Check the consolidation mapping, since combined ERP tax accounts are the usual source of a merged presentation.
Split the combined tax line: present current tax (IAS 1.54(n)) separately from deferred tax (IAS 1.54(o)); offsetting between the two categories is not permitted.
Official guidance: IFRS issued standards
The legal right normally exists when the current tax asset and liability relate to income taxes levied by the same taxation authority that permits a single net payment (IAS 12.72). In consolidated financial statements, current tax balances of different group entities may be offset only if the law allows a single net payment and the entities intend to settle that way (IAS 12.73). Obtain the statute, filing-group election, or a tax opinion rather than assuming the right exists.
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Official guidance: IFRS issued standards
Intention to pay on a gross basis precludes offset even when a legal right exists; document management intent at each reporting date.
Present current tax assets and liabilities gross by jurisdiction; offset under IAS 12.71 requires both the legal right and the intention to settle net or simultaneously.
Official guidance: IFRS issued standards
IAS 12.74 requires a legally enforceable right to set off current tax assets against current tax liabilities, and that the deferred balances relate to income taxes levied by the same taxation authority on the same taxable entity. Different taxable entities may net only if they will settle current tax on a net basis, or realize and settle simultaneously, in each future period in which the deferred balances reverse (IAS 12.74(b)(ii)). Cross-border netting is never appropriate.
Reverse deferred tax offsets that cross taxation authorities or taxable entities; IAS 12.74 confines netting to balances within one jurisdiction that meet the right-of-set-off test.
Official guidance: IFRS issued standards
When an entity presents a classified statement of financial position, IAS 1.56 prohibits presenting deferred tax assets or liabilities as current - regardless of when the underlying temporary differences reverse. Do not split a net deferred balance into current and non-current portions; the entire recognized amount is non-current. Reversal timing matters only for the more-than-twelve-months disclosure in IAS 1.61.
Reclassify all deferred tax balances to the non-current sections; IAS 1.56 prohibits classifying deferred tax assets or liabilities as current.
Official guidance: IFRS issued standards
Classify each current tax receivable and payable using IAS 1.66 (assets) and IAS 1.69 (liabilities): amounts expected to be realized or settled within twelve months of the reporting date, or within the normal operating cycle, are current. Long-running tax disputes, installment agreements, and multi-year refund claims often belong in non-current. Where one line combines both, disclose the amount recoverable or settled after more than twelve months (IAS 1.61).
Reclassify current tax between current and non-current using expected recovery or settlement dates under IAS 1.66 and IAS 1.69, and disclose the over-twelve-month amount under IAS 1.61.
Official guidance: IFRS issued standards
Deferred tax is never classified as current under IAS 1.56; offsetting operates by jurisdiction on gross DTA versus gross DTL under IAS 12.74, not by the timing of temporary difference reversal. Carving out the portion expected to reverse within twelve months into current assets or liabilities is a common ERP mapping error carried over from other GAAP frameworks - remove the split rather than refining it.
Remove the current/non-current split of deferred tax; the full recognized deferred balance is non-current under IAS 1.56.
Official guidance: IFRS issued standards
Cross-border DTAs and DTLs cannot offset; prepare jurisdiction-level offset schedules even when consolidated presentation shows a single net figure per jurisdiction.
Rebuild the offset analysis by taxation authority and taxable entity; consolidation may aggregate only the net position of each jurisdiction that satisfies IAS 12.74.
Official guidance: IFRS issued standards
IAS 12.81(e) requires disclosure of the amount and expiry date of deductible temporary differences, unused tax losses, and unused tax credits for which no deferred tax asset is recognized. Build the figure from the gross temporary difference and loss registers, not tax-effected amounts, and separate expiring attributes from indefinite-life ones. Offsetting and classification rules apply only to recognized balances - they never eliminate this disclosure.
Add the IAS 12.81(e) disclosure of unrecognized deductible temporary differences, unused losses, and credits together with their expiry profile.
Official guidance: IFRS issued standards
Auditors expect a bridge from gross DTA and DTL to net statement balances with explanation of offset criteria applied per IAS 12.74.
Prepare a gross-to-net deferred tax bridge by jurisdiction supporting the IAS 12.81(g) note amounts and evidencing the IAS 12.74 offset criteria.
Official guidance: IFRS issued standards
Tax instalments due within twelve months are current; disputed assessments expected to settle beyond twelve months may be non-current depending on facts and accounting policy.
Reclassify current tax line items so placement follows expected settlement timing under IAS 1.66 and IAS 1.69.
Official guidance: IFRS issued standards
Keep a memo per jurisdiction evidencing the legally enforceable right of set-off (statute, filing-group election, or tax opinion per IAS 12.72) and management's settlement intention (IAS 12.71(b); IAS 12.74(b)). In the rare cases described in IAS 12.76, where the right exists only for some periods, detailed scheduling of reversal timing may be needed to support the offset presentation. Retain tax authority guidance and settlement plans for audit support.
Current and deferred tax presentation complies with IAS 12.71-76 offsetting and IAS 1 classification; retain the jurisdiction memos with the reporting file. Document the legal right of set-off and settlement intention for every netted balance before the financial statements are authorized (IAS 12.71; IAS 12.74; IAS 12.76).
Official guidance: IFRS issued standards
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