Page 17 - PowerPoint Presentation

INCOME TAXES

Exempt Differences

• A deferred tax liability should be recognised for all taxable
temporary differences unless the deferred tax liability arises from

• goodwill for which amortisation is not deductible for tax
purposes; or

• the initial recognition of an asset or liability in a transaction

which

• is not a business combination; and
• at the time of the transaction, affects neither the accounting profit

nor the taxable profit (tax loss)

• These differences are then treated as exempt differences and no

deferred tax expense is provided on them.

• The initial recognition of an asset or a liability will therefore be
treated as an exempt difference if that item does not affect the

tax computation, meaning that specific asset or liability is never
taxable or deductible for tax purposes.

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