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Tax calculation and disclosure examples

This item includes two worked examples of income tax disclosures prepared in accordance with NZ IAS 12. The spreadsheets used for these examples include a summary of the movements in the tax accounts, the tax-related journal entries, the current tax calculation, the deferred tax calculation, and a summary of the tax and accounting fixed asset registers.

Example 1 – Tax calculations TMCL 2018

This example is based on a profitable operating company with revalued assets. It shows the different approach to calculating deferred tax on building assets recognised both pre and post May 2010. It also shows the calculation of deferred tax on revaluation gains, and the accounting treatment of tax loss transfers.

Example 2 – Tax calculations TMIL 2018

This example is based on a company with an investment property, derivatives and tax losses. In this example, the presumption of recovery by sale for the investment property has not been rebutted. As a result, deferred tax on this asset is calculated based on the tax consequences of sale. In addition, as the entity does not satisfy the probable test, it is unable to recognise a deferred tax asset in relation to some of its tax losses. The example also shows the tax treatment of hedge accounting for derivatives.

Both of these examples use the same standard spreadsheet, although there are some differences in the format of the supporting information. The examples have been developed primarily for training purposes, but the spreadsheet could also be used as a basis for preparing tax calculations and disclosures for financial reporting purposes.

The tax note included in the spreadsheet is based on the disclosures required for entities reporting under Tier 1. Disclosure of the balance of imputation credits is not required under Tier 2 (RDR).

For further information about deferred tax and tax loss transfers, please refer to the following items on our website:

Page created: 25 January 2018