2 DefinitionINCOME TAXIncludes all domestic and foreign taxes that are based on taxable profit.Includes taxes, such as withholding taxes that are payable by a subsidiary, associate or joint venture on distributions to the reporting entity.
3 Definition CURRENT TAX Tax payable or refundable in respect of the taxable profit (tax loss) for the current period or past periods.
4 Definition DEFERRED TAX Tax payable or recoverable in future periods, generally as a result of:Entity recovering its assets and liabilities for their current carrying amount.Tax effect of the carry forward of currently unused tax losses and tax credits.
5 Recognition of Current Tax SMEs FULLRecognize Current Tax Asset –If the amount paid for the current and past periods exceeds the amount payable for those periods.- For the amount of benefit of a tax loss that can be carried back to recover tax paid in a previous period.Same
6 Measurement of Current Tax SMEs FULLAt the amount it expects to pay or recover using the tax rates and laws that have enacted or substantively enacted by the reporting date.- Current tax should not be discounted based on IFRS for SMEs- SameDiscounting current tax is not prohibited.
7 Recognition of Deferred Tax SMEs FULLAn entity shall recognize:Deferred Tax Liability – for all temporary differences that are expected to increase taxable profit in the future.Deferred Tax Asset – for all temporary differences that are expected to reduce taxable profit in the future.Deferred Tax Asset – for the carry forward of unused tax losses and unused tax creditSame
8 SMEs FULL Recognition of Deferred Tax: Exceptions Should not recognize a DTA or DTL for temporary differences associated with unremitted earnings from foreign subsidiaries, branches, associates and joint ventures to the extent that the investment is essentially permanent in duration, unless it is apparent that the temporary difference will reverse in the foreseeable future.Entity shall recognize a deferred tax liability for all taxable temporary differences associated with investments in subsidiaries, branches and associates, and interests in joint ventures, except to the extent that both of the following conditions are satisfied:The parent, investor or venture is able to control the timing of the reversal of the temporary difference, andIt is probable that the temporary difference will not reverse in the foreseeable future.
9 SMEs FULL Recognition of Deferred Tax: Exceptions Should not recognize DTL for temporary difference associated with the initial recognition of goodwill.Shall not recognize DTL for:(a) the initial recognition of goodwill; or(b) the initial recognition of an asset or liability in a transaction which:(i) is not a business combination; and(ii) at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss).
10 Recognition of Deferred Tax SMEs FULLChanges in a deferred tax liability or DTA as tax expense in profit or loss, except that a change attributable to an item of income or expense recognized under this IFRS as other comprehensive income shall also be recognized in other comprehensive income.Same
11 Measurement of Deferred Tax SMEs FULLDTL or DTA is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date.Same
12 Measurement of Deferred Tax SMEs FULLWhen different tax rates apply to different levels of taxable profit, entity shall measure DTA or DTL using the average enacted or substantively enacted rates that it expects to be applicable to the taxable profit (loss) of the periods in which it expects the DTA to be realized and the DTL to be settled.Same
13 Measurement of Deferred Tax SMEs FULLMeasurement shall reflect the tax consequences that would follow from the manner in which the entity expects, at the reporting date, to recover or settle the carrying amount of related assets and liabilities. For example, temporary differences arises from an item of income that is expected to be taxable as a capital gain in a future period, the deferred tax expense is measured using the capital gain tax rate.Same
14 Measurement of Deferred Tax SMEs FULLDiscounting of deferred tax is explicitly prohibited.Same
15 DefinitionTAX BASISDetermines the amounts that will be included in taxable profit on recovery or settlement of the carrying amount of an asset or liability
16 TAX BASIS FOR ASSET SMEs FULL Amount that would have been deductible in arriving at taxable profit if the carrying amount of an asset had been recovered through sale at the end of the reporting period.If the recovery of the asset through sale does not increase the taxable profit, the tax basis is deemed to be equal to the carrying mount.SameExcept that:If the manner in which an entity recovers or settles the carrying amount of an asset or liability may affect either or both of:a) tax rate applicable when entity recovers or settles the CA of the asset andb) the tax base of the asset – entity will then measure deferred tax assets and liabilities using the tax rate and tax base that are consistent with the expected manner of recovery or settlement.
17 TAX BASIS FOR LIABILITY SMEs FULLCarrying amount less any amounts deductible in determining taxable profit (or plus any amounts included in taxable profit) the would have arisen if the liability had been settled for its carrying amount at the end of the reporting period.For deferred revenues, the tax base of the resulting liability is its carrying amount less any amount of revenues that will not be taxable in the future periods.Same
18 TEMPORARY DIFFERENCES SMEs FULLIt arise when:There is a difference between the CA and tax bases on the initial recognition of assets and liabilities, or at the time a tax basis is created for those items that have a tax basis but are not recognized as assets and liabilities.Same
19 TEMPORARY DIFFERENCES SMEs FULLIt arise when:A difference between the CA and tax basis arises after initial recognition because income and expense is recognized in comprehensive income or equity in one reporting period but is recognized in taxable profit in a different period.The tax basis of an asset or liability changes and the change will not be recognized in the asset or liability’s CA in any period.Same
20 VALUATION ALLOWANCE SMEs FULL No mention on valuation of allowance. Entity shall recognize a valuation allowance against DTA so that the NCA equals the highest amount that is more likely than not to be recovered based on current or future taxable profit.No mention on valuation of allowance.
21 VALUATION ALLOWANCE SMEs FULL Entity shall review the NCA of a DTA at each reporting date and shall adjust the valuation allowance to reflect current assessment of future taxable profits.Such adjustment shall be recognized on profit or loss, except that the adjustment attributable to an item of income or expense recognized in accordance with IFRS as other comprehensive income shall also be recognized in other comprehensive incomeSameCA of DTA shall be reviewed at the end of each reporting period. An entity shall reduce the CA of a DTA to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit or part or all of that DTA to be utilized. Such reduction shall be reversed to the extent that it becomes probable that sufficient taxable profit will be available.
22 UNCERTAINTY SMEs FULL No specific guidance under IAS 12. Entity shall measure current and DTA and DTL using the probability weighted average amount of all possible outcomes, assuming that tax authorities will review the amounts reported and have full knowledge of all relevant information.Changes in probability weighted average amount of all possible outcomes shall be based on new information, not a new interpretation.No specific guidance under IAS 12.In practice, management records the liability measured as either single best estimate or a weighted average probability of the possible outcomes, if the likelihood is greater than 50%
23 DIVIDENDS TO SHAREHOLDERS SMEs FULLIn these circumstances, current and deferred tax assets and liabilities are measured at the tax rate applicable to undistributed profits until the entity recognizes a liability to pay a dividend.If an entity recognizes a liability to pay dividends, it shall recognize the resulting current or DTL or DTA and the related expense (income).Not applicable in the PhilippinesSame
24 SMEs FULL WITHHOLDING TAX ON DIVIDENDS When an entity pays dividend to its shareholders, it may be required to pay a portion of the dividends to taxation authorities on behalf of the shareholders.Such amount paid or payable to taxation authorities is charged to equity as part of the dividends.Same
25 SMEs FULL PRESENTATION Entity shall recognize in the same component of total comprehensive income or equity as the transaction or other event that resulted in tax expense.If an entity presents CA and Non-current assets and CL and NCL, as separate classification in its statement of financial position, it shall not classify any DTA or DTL as current assets and liabilities.Same
26 SMEs FULL PRESENTATION: OFFSET Same Shall offset current tax assets and current tax liabilities or offset DTA or DTL only when it has a legally enforceable right to set off the amounts and it intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.Same
27 OTHERS: Areas covered in Full IFRS but not in IFRS for SMEs: Assets carried at Fair ValueReassessment of unrecognized deferred tax assets.Deferred tax arising from a business combination.Current and deferred tax arising from share-based compensation.Exchange differences on deferred foreign tax liabilities or assets.
28 IFRS 32: Events After The End of The Reporting Period IFRS for SMEs
29 Definition EVENTS AFTER THE END OF REPORTING PERIOD: These are events, both favorable and unfavorable, that occur between the end of the reporting period and the date when the financial statement are issued.Events may be either adjusting or non-adjusting.Includes events after the reporting period and those after the public announcement of profit or loss of selected financial information
30 Definition ADJUSTING EVENTS: Events which provide evidence of conditions existing at the end of the reporting period.Require adjustments in financial statement accounts and disclosures.
31 Definition NON-ADJUSTING EVENTS Events which are indicative of conditions arising after the end of the reporting period.Do not require adjustments of financial statement amounts.
32 Recognition & Measurement DIVIDENDSDividends which are proposed or declared after the reporting period but before the issue of financial statements are not treated as liabilities in the financial statements.The amount of dividends may be presented as a separate component of retained earnings for the period.
33 Disclosure DATE OF ISSUANCE OF FINANCIAL STATEMENTS An entity shall disclose the date when the financial statements are authorized for issue and who gave the authorization.If the owners or any others have the power to amend the statements after date of issuance, such fact should be disclosed.
34 Disclosure NON-ADJUSTING EVENTS The entity shall disclose both the: a) nature of the event andb) an estimate of its financial effect or a statement that such an estimate can’t be made.
35 KEY DIFFERENCE SMEs FULL IAS 10.14 states that No mention of going concern issues after the end of the reporting period.IAS states that“An entity shall not prepare its financial statements on a going concern basis if management determines after the end of the reporting period either that it intends to liquidate the entity or to cease trading, or that it has no realistic alternative but to do so.“
36 IFRS 33: Related Party Disclosures IFRS for SMEs
37 Definition RELATED PARTY: A related party is a person or entity that is related to the entitypreparing its financial statements.A PERSON or close member of that person’s family is related if that person:Is a member of the key management personnelHas control over the entityHas joint control or significant influence over the entity.
38 Definition An ENTITY is related to a reporting entity if: The entity and reporting entity are members of the same groupEither entity is an associate or joint venture of the otherBoth entities are joint ventures of a third entityEither entity is a joint venture of a third entity and the other entity is an associate of the third entityThe entity is a post-employment benefit plan for the benefit of employees of the entity or any related entityThe entity is controlled or jointly controlled by a person identified in (a)A person identified in (a) (i) has significant voting powerA person identified in (a) (ii) has significant influenceA person has both significant influence and joint controlA member of the key management personnel has controlor joint control over the reporting entity.
39 Disclosures SUBSIDIARY RELATIONSHIPS Must be disclosed irrespective of whether there are any related party transactions.Entities must disclose the name of the parent and the ultimate controlling party.
40 Disclosures KEY MANAGEMENT PERSONNEL COMPENSATION Must be disclosed in total.
41 Disclosures MINIMUM DISCLOSURES a) The amount of the transactions b) The amount of outstanding balances including:• Their terms and conditions• Details of any guaranteesc) Provisions for uncollectible receivablesd) The expense recognized in the period for bad or doubtfuldebts.
42 Disclosures SEPARATE DISCLOSURES FOR THE FOLLOWING CATEGORIES: a) Entities with control, joint control or significant influence over the entityb) Entities over which the entity has control, joint control or significant influencec) Key management personneld) Other related parties.
43 Exempted Entitiesa) A state that has control, joint control or significant influence over the entityb) Another entity that is a related party because the state has control, joint control or significant influence over both parties.
44 Key Differences SMEs FULL An entity must disclose key management personnelcompensation in total.An entity must disclose key management personnelcompensation in total and for each of the following categories:a)Short-term employee benefitsb) Post-employment benefitsc) Other long-term benefitsd) Termination benefitse) Share-based payment.
45 Key Differences SMEs FULL The above disclosures must be made separately for each of the following categories:a) Entities with control, joint control or significant influence over the entityb) Entities over which the entity has control, joint control or significant influencec) Key management personneld) Other related parties.The above disclosures must be made separately for each of thefollowing categories:a) The parentb) Entities with joint control or significant influence over the entityc) Subsidiariesd) Associatese) Joint ventures in which the entity is a venturerf) Key management personnelg) Other related parties.
46 Key Differences SMEs FULL An entity is exempt from the disclosure requirements above in relation to:a) A state that has control, joint control or significant influence over the entityb) Another entity that is a related party because the state has control, joint control or significant influence over both parties.IAS 24 provides a similarexemption for state controlled entities. However, the following must be disclosed:a) The name of the government and the nature of its relationship with the reporting entityb) The following in sufficient detail to allow users to understand the effect of the transactions:• The nature and amount of each individually significant transaction• For other transactions that are collectively significant, a qualitative or quantitative indication of their extent.
48 Includes exploration, evaluation and extraction of mineral resources EXTRACTIVE ACTIVITIESDEFINITION:Includes exploration, evaluation and extraction of mineral resourcesRECOGNITION AND MEASUREMENTExploration expenditure on the acquisition or development of tangible and intangible assets by applying Sections 17 and 18 [IFRS for SMEs].When the entity has an obligation to dismantle the item or restore the site, such an obligation is accounted for in accordance with Sections 17 and 21 [IFRS for SMEs].
49 SMEs FULL KEY DIFFERENCES: EXTRACTIVE ACTIVITIES Exploration expenditures recognized in accordance with Sections 17 and 18.Exploration and evaluation assets are measured at cost. Policy may be developed to determine which evaluation costs are recognized as assets. Restriction applies to certain types of expenditures.