The Board discussed possible revisions to the objective and the scope of the income tax project. The Board decided that the objective of the project is to resolve problems in practice under IAS 12, without changing the fundamental approach under IAS 12, and preferably without increasing divergence from US GAAP. The Board also decided that the scope of the project would include the following:
- Uncertain tax positions, but only after the Board completes its current deliberations on IAS 37
- Deferred tax on remeasurement of investment property at fair value
- Introduction of the proposals in the ED Income Tax on:
- the introduction of an initial step to consider whether the recovery of an asset or settlement of liability will affect taxable profit
- the recognition of a deferred tax asset in full and an offsetting valuation allowance to the extent necessary
- guidance on assessing the need for a valuation allowance
- guidance on the meaning of substantive enactment
- the allocation of current and deferred taxes within a group that files a consolidated tax return.
In addition, the Board indicated that it would explore the possibility of resolving the issue of the tax effect of dividends by entities, such as real estate investment trusts and co-operative societies.
The Board also discussed the issue of deferred tax on remeasurement of investment property at fair value. The Board directed the staff to explore the possibility of an exception for investment property measured using the fair value model under IAS 40, based on the lower of tax consequences of sale or of use.
The staff will bring proposals on the above issues to Board meetings starting in the third quarter of 2010.