Page 18 - PowerPoint Presentation
P. 18
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.
