At this meeting, the Board discussed a summary of feedback received on the pre-ballot draft of the exposure draft Deferred Taxes: Recovery of Underlying Asset. This draft had been circulated in response to the Board's tentative decision in July 2010 to introduce an exception to the measurement principle in paragraph 52 of IAS 12 Income Taxes.
In order to address the concerns raised in the feedback, the Board tentatively decided that the exception should:
- apply when the expected manner of recovery of certain underlying assets is difficult and subjective to determine;
- apply when deferred tax assets or deferred tax liabilities arise from:
- investment property that is measured at fair value in accordance with IAS 40 Investment Property; and
- property, plant and equipment or intangible assets that are measured using the revaluation model in IAS 16 Property, Plant and Equipment or IAS 38 Intangible Assets;
- be applied equally to both deferred tax assets and deferred tax liabilities;
- measure deferred taxes based on the tax consequences following the rebuttable presumption of recovery of the carrying amount of the underlying asset entirely by sale;
- be required, rather than permitted, to be applied, unless an entity consumes the asset's economic benefits throughout its economic life; and
- propose the withdrawal of SIC Interpretation 21 Income Taxes - Recovery of Revalued Non-Depreciable Assets.
The Board also tentatively decided to ask in the exposure draft whether any specific transition guidance is necessary when the amendment is applied to previous business combinations.
The Board instructed the staff to prepare the exposure draft Deferred Taxes: Recovery of Underlying Asset, reflecting these tentative decisions. The Board plans to publish the exposure draft for comment in early September with a 60-day comment period.