This free, guided checker walks your finance team through the key decision points for IFRIC 23 Uncertain Tax Positions. 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.
Here is what the checker asks and why each step matters. Prefer to talk it through? Contact us and we will help directly.
IFRIC 23 applies when there is uncertainty over income tax treatments under IAS 12 - for example unclear tax law, positions differing from authority practice, or transfer-pricing and permanent-establishment questions (IFRIC 23.4-5). Assess acceptance risk from the authority's likely challenge. The common trap is treating routine estimation of a clear position as an uncertain tax treatment.
Apply IAS 12 without an IFRIC 23 uncertainty adjustment; the tax treatments are not uncertain (IFRIC 23.4).
Official guidance: IFRS issued standards
Determine the unit of account by whether assessing each uncertain treatment separately or grouping it with others better predicts the resolution of the uncertainty (IFRIC 23.6; IFRIC 23.7). Related transfer-pricing adjustments across jurisdictions are often grouped. The common trap is defaulting to a single portfolio assessment when the treatments will actually be resolved individually.
Build a register of uncertain tax treatments and set the unit of account before measurement (IFRIC 23.6; IFRIC 23.7).
Official guidance: IFRS issued standards
Assume the taxation authority will examine amounts it is entitled to and has full knowledge of all related information (IFRIC 23.8); then assess whether it is probable - more likely than not - that it will accept the treatment (IFRIC 23.9). If not probable, reflect the uncertainty in the tax amounts (IFRIC 23.11). The common trap is anchoring on detection risk rather than assuming full examination.
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Official guidance: IFRS issued standards
When acceptance is probable, determine taxable profit, tax bases, unused losses and credits, and tax rates consistently with the treatment used or planned in the income tax filing, with no uncertainty adjustment (IFRIC 23.10). Apply the same accepted tax base to the related deferred tax. The common trap is still carrying a provision against a position judged probable of acceptance.
Measure taxable profit and tax amounts consistently with the probable accepted treatment (IFRIC 23.10).
Official guidance: IFRS issued standards
When acceptance is not probable, reflect the uncertainty using the method that better predicts its resolution: the most likely amount for a binary or narrow set of outcomes, or the expected value (probability-weighted) for a range of outcomes (IFRIC 23.11; IFRIC 23.12). Apply the choice consistently for similar positions. The common trap is averaging outcomes for a genuinely binary dispute.
Select and apply the most likely amount or expected value method to each uncertain treatment (IFRIC 23.11; IFRIC 23.12).
Official guidance: IFRS issued standards
Reassess the judgements and estimates when facts or circumstances change or new information arises - an audit opening, a ruling, case law, or a lapse of the examination period - and account for the change as a change in estimate under IAS 8 (IFRIC 23.13; IFRIC 23.14). The common trap is holding a position static once the examination window has lapsed or an audit has closed.
Remeasure the uncertain tax positions for the new information as a change in estimate (IFRIC 23.13; IFRIC 23.14).
Official guidance: IFRS issued standards
Additional current tax measured under IFRIC 23 in excess of amounts paid or provided is recognised as a current tax liability (IAS 12.12; IAS 12.46). Interest and penalties are classified by their nature - within tax expense if they meet the definition of income taxes, otherwise under IAS 37. The common trap is netting the additional liability against an unrelated tax recoverable.
Recognise the current tax liability for the additional tax on the uncertain positions (IAS 12.12; IAS 12.46).
Official guidance: IFRS issued standards
Uncertain treatments change tax bases, unused tax losses, and unused tax credits, which flow through to temporary differences and deferred tax (IFRIC 23.4; IAS 12.47). Reassess the recoverability of deferred tax assets when the acceptance probability changes (IAS 12.56). The common trap is updating current tax for an uncertain position while leaving the related deferred tax on the old tax base.
Update the deferred tax for the revised tax bases on the uncertain treatments (IFRIC 23.4; IAS 12.47).
Official guidance: IFRS issued standards
IFRIC 23 does not address interest and penalties; classify them by their nature - within income tax expense under IAS 12 where they meet the definition of income taxes, otherwise as provisions under IAS 37 (IAS 12.2; IAS 37.14). Apply the policy consistently. The common trap is defaulting all tax-related interest and penalties to the tax line without assessing their nature.
Reclassify interest and penalties to the appropriate expense category based on their nature (IAS 12.2; IAS 37.14).
Official guidance: IFRS issued standards
Disclose the significant judgements made in applying IFRIC 23 (IAS 1.122) and the assumptions and sources of estimation uncertainty with a risk of material adjustment (IAS 1.125), plus any tax-related contingencies (IAS 12.88). Provide sensitivity where a range of outcomes is material. The common trap is disclosing the accounting policy but omitting the judgement and estimation-uncertainty narrative.
Draft the IFRIC 23 disclosure of judgements and estimation uncertainty (IAS 1.122; IAS 1.125).
Official guidance: IFRS issued standards
Maintain a roll-forward of each uncertain position showing the filed amount, the measured amount, the probability assessment, and movements from settlements, remeasurement, and rate changes, reconciled to current tax expense, tax liabilities, and deferred tax (IFRIC 23.13; IAS 12.81). The common trap is a register that does not tie to the tax provision and the balance sheet.
Uncertain tax positions are measured and disclosed in accordance with IFRIC 23 (IFRIC 23.13; IAS 12.81). Complete the UTP roll-forward and reconciliation before authorisation (IFRIC 23.13; IAS 12.81).
Official guidance: IFRS issued standards
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