Hello Community,
Can someone help me understand this better that OCI items can be presented either net of tax effects or before tax, with the overall tax impact disclosed separately. In either case, entities must specify the tax amount related to each item in OCI, including any reclassification adjustments (IAS 1.90-91).
What I don't understand is that how would an adjustment in OCI attract income tax? It has to be an "Income" afterall to be subject to taxation which is not the case unless it is reclassified to PnL for e.g. revaluation surplus.
IAS 1.90
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CPA Kevin Matt
- Posts: 27
- Joined: 10 Jun 2023, 16:47
Re: IAS 1.90
Hello Community,
Allow me to update my question slightly: Income tax expense on OCI items would be towards creating deferred tax asset/liability unless reclassified and becomes a part of accounting profit. Would you agree?
Allow me to update my question slightly: Income tax expense on OCI items would be towards creating deferred tax asset/liability unless reclassified and becomes a part of accounting profit. Would you agree?
Re: IAS 1.90
Hi Kevin,
Yes, the tax effect is usually deferred taxation. But please mind that gains and losses in the income statement may also give rise to deferred taxes. That is because income taxes follow local tax rules and it is often the case that tax accounting rules are different from financial accounting standards.
Yes, the tax effect is usually deferred taxation. But please mind that gains and losses in the income statement may also give rise to deferred taxes. That is because income taxes follow local tax rules and it is often the case that tax accounting rules are different from financial accounting standards.
Re: IAS 1.90
I'd even say that it's always deferred tax in OCI, hard to imagine any of the OCI items having an impact on current income tax