Page 65 - PowerPoint Presentation

INCOME TAXES

Comprehensive Example

Note: Change in Tax Rate

• The tax rate is changing for all financial years starting on or after
1 March 20.12. As a result, Montana Ltd will pay current tax for
the year ended 29 February 20.12 at 28% (the old tax rate) but

will pay current tax at 27% for the financial year ending 28
February 20.13.

• In accordance with IAS 12.47, deferred tax assets and liabilities
shall be measured at the tax rates that are expected to apply to
the period when the asset is realized or the liability is settled,

based on tax rates (and tax laws) that have been enacted or
substantively enacted by the end of the reporting period. As
deferred tax represents future tax consequences on assets and
liabilities, the deferred tax as at 29 February 20.12 should

therefore be raised at the tax rate that will apply in future, being
the new tax rate of 27%.