Deferred Tax Calculator
for General
Identify temporary differences, run deferred tax under IAS 12, and surface the recoverability assessment audit inspections challenge most often. ROU/lease liability split included.
Deferred tax, audit-ready.
Not just computed.
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IAS 12 deferred tax for General
Deferred tax sits at the intersection of accounting and tax law, and getting it wrong creates material misstatements that regulators catch. The IAASB's post-implementation review of ISA 540 (Revised) flagged deferred tax as one of the most common accounting estimates where auditors struggle to obtain sufficient appropriate audit evidence. The reason is straightforward: deferred tax requires you to compare two measurement systems (the accounting carrying amount under IFRS and the tax base under local tax law) for every asset and liability on the balance sheet. Miss a temporary difference or apply the wrong rate, and the error flows through both the tax line and OCI.
IAS 12.5 defines a temporary difference as the difference between the carrying amount of an asset or liability in the statement of financial position and its tax base. These temporary differences are either taxable (creating deferred tax liabilities) or deductible (creating deferred tax assets). The standard requires recognition of deferred tax liabilities for all taxable temporary differences, with limited exceptions in IAS 12.15 for goodwill on initial recognition and assets or liabilities in transactions that affect neither accounting profit nor taxable profit. Deferred tax assets receive different treatment under IAS 12.24: you recognise them only to the extent that it is probable the entity will earn future taxable profits against which the deductible temporary differences can be used. That probability assessment is where most audit disputes arise.
Audit inspection reports from the FRC, PCAOB, AFM, and other regulators consistently identify four problem areas in deferred tax. First, entities fail to identify all temporary differences, particularly those arising from right-of-use assets under IFRS 16 and fair value adjustments on business combinations. Second, the recoverability assessment for deferred tax assets relies on management's profit forecasts, which auditors often accept without testing the underlying assumptions. Third, rate changes create re-measurement requirements under IAS 12.47 that preparers miss or apply to the wrong population of temporary differences. Fourth, disclosure under IAS 12.79 through IAS 12.88 is frequently incomplete, with the rate reconciliation omitting material reconciling items.
This calculator takes the manual effort out of identifying and computing temporary differences. You input the carrying amount and tax base for each balance sheet item along with the applicable tax rate, and the tool computes the resulting deferred tax asset or liability. It flags items where the temporary difference has reversed compared to the prior period and highlights positions where a deferred tax asset requires a recoverability assessment. The output is a workpaper-ready summary that maps to the disclosure requirements in IAS 12.81. The calculator gives you a structured starting point that reduces the risk of omission, for both first-year IFRS computations and audits of existing ones.