This exposure draft (issued September 2010) states that for investment property, property plant and equipment and intangible assets measured using a fair value or revaluation model, the measurement of deferred tax liabilities and deferred tax assets should reflect a rebuttable presumption that the carrying amount of the underlying asset will be recovered entirely through its sale. The presumption is rebutted only where there is clear evidence that the assets value will be consumed by the entity over its economic life.

The proposed change is intended to assist in situations where, for example, an investment property is measured at fair value and is being held to generate rental income as well as capital gains. The related tax effect accounting entries can be difficult and subjective to determine in such circumstances. This issue will affect jurisdictions where capital gains are taxed differently from income earned from usage.

This proposal would represent an exception to the general principal in AASB 112 that the measurement of DTA and DTL balances should reflect the tax consequences that would follow from that manner in which the entity expects to recover or settle the carrying amount of its assets and liabilities.


Contact

Rob Mackay
T +61 3 8635 1800
rmackay@moorestephens.com.au

www.moorestephens.com.au