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GOVERNMENT GRANTS AND GOVERNMENT ASSISTANCE
Deferred tax
Asset-based grant recognised as deferred income
• Deferred tax implications will arise on the deferred
income.
• Since no amount of the grant will be taxed in future, as
the grant was fully taxed on receipt thereof, the tax
base of the grant will be nil.
• Because the grant is deferred and amortised over the
useful life of the asset, the carrying amount of the
deferred income will be greater than the tax base
thereof.
• This will give rise to a deferred tax asset.
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