This free, guided checker walks your finance team through the key decision points for IAS 12.19 Deferred Tax in Business Combinations. Answer a few questions to see the likely treatment and the evidence to document.
Answer a few quick questions below. It is private - nothing is submitted or stored - and takes about a minute.
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.
Here is what the checker asks and why each step matters. Prefer to talk it through? Contact us and we will help directly.
Business combinations trigger acquisition-date fair value measurement of identifiable assets, liabilities, and deferred tax effects under IAS 12.19.
IAS 12.19 business combination deferred tax workflow does not apply.
Official guidance: IFRS issued standards
Include differences on fair value adjustments to assets and liabilities, intangible assets, contingent liabilities, and carryforward losses of the acquiree.
Complete the acquiree temporary difference inventory required by IAS 12.19 before computing goodwill under IFRS 3.32.
Official guidance: IFRS issued standards
IAS 12.34 limits DTA recognition; at acquisition, consider acquiree's future taxable profit in the combined group and any restrictions on loss utilization.
Reapply the IAS 12.34 probable-taxable-profit test to acquiree losses and deductible differences; the resulting DTA changes goodwill, not profit or loss, at acquisition (IAS 12.66).
Official guidance: IFRS issued standards
IAS 12.19 requires recognizing deferred tax on fair value uplifts even when the acquiree did not previously recognize them; the offset affects goodwill, not profit or loss at acquisition.
Record acquisition-date deferred tax as an identifiable item of the purchase price allocation, adjusting goodwill under IAS 12.66 before the PPA is finalized.
Official guidance: IFRS issued standards
Revalued property, identifiable intangibles, and inventory step-ups create new taxable temporary differences requiring acquisition-date DTL under IAS 12.19.
Recognize the DTL on fair value taxable temporary differences at acquisition date with the offset to goodwill (IAS 12.19; IAS 12.66).
Official guidance: IFRS issued standards
Under the proportionate NCI method, NCI includes its share of fair-valued net assets and related deferred tax; fair value NCI method uses full fair value of NCI without separate deferred tax allocation to NCI share of DTL.
Recalculate NCI on net identifiable assets inclusive of acquisition deferred tax, consistent with the IFRS 3.19 measurement election.
Official guidance: IFRS issued standards
Use enacted or substantively enacted rates expected when differences reverse; acquisition-date rate applies to fair value adjustments regardless of acquiree's historical rates used.
Remeasure acquisition deferred tax at the enacted or substantively enacted rates required by IAS 12.47 and adjust goodwill accordingly.
Official guidance: IFRS issued standards
New information about facts existing at acquisition date adjusts goodwill; changes after the measurement period affect profit or loss.
Correct measurement-period deferred tax adjustments through goodwill per IFRS 3.45 and IAS 12.68, not through profit or loss.
Official guidance: IFRS issued standards
IAS 12.19 applies to contingent liabilities recognized at fair value under IFRS 3; deductible temporary differences may arise on litigation and warranty provisions.
Add IFRS 3.23 contingent liabilities to the acquisition deferred tax schedule and recognize the related deferred tax through goodwill (IAS 12.19).
Official guidance: IFRS issued standards
Only acquisition-date measurement and measurement-period adjustments affect goodwill; subsequent remeasurement follows standard IAS 12 profit or loss recognition.
Reclassify post-acquisition deferred tax movements from goodwill to profit or loss as required by IAS 12.68 and IAS 12.60.
Official guidance: IFRS issued standards
PPA schedule should show fair values, deferred tax, net identifiable assets, goodwill, and NCI with deferred tax clearly identified as a liability or asset line.
Complete the PPA reconciliation, including deferred tax, so the IFRS 3.B64 disclosure ties to recorded amounts before authorization.
Official guidance: IFRS issued standards
IFRS 3.B64 and IAS 12.81 require disclosure of acquisition-date amounts and tax effects on fair value adjustments where material.
Acquisition deferred tax is recognized in the PPA with appropriate goodwill and NCI allocation and disclosed under IFRS 3.B64. Draft the IFRS 3.B64 business combination note including deferred tax on fair value adjustments and the IAS 12.81(j)-(k) items.
Official guidance: IFRS issued standards
Send us your situation and one of our senior CPAs will review it with you - fixed fee, no surprises.
Contact Us