Tax Accounting | IFRS

This is a quick reference guide to provide you with an overall understanding of the IFRS tax accounting sheets and how these sheets can help you calculate the tax figures for your accounts.

The tax accounting sheets gather and analyse the information from the tax computation and calculate your permanent and temporary differences for the period. These figures are then linked into the Tax account and Accounts disclosures which provide the figures to populate the tax notes in your accounts.

The IFRS tax accounting sheets are developed from

Insert > Insert sheet > Tax account – IFRS

.

The

Tax account (I)

and the

Accounts disclosures (I2)

form the basis for your tax figures in your accounts. The other supporting tax accounting sheets are populated with information from the tax computation and other disclosure sheets within the computation.

This guide aims to provide a walkthrough of the tax accounting sheets in the order in which we would generally expect the tax accounting sheets to be populated [however this is not prescriptive, and the order you choose may vary depending on your requirements].

The

Tax basis balance sheet I3

is the starting point for tax accounting. You should replicate your balance sheet on this sheet and use this as the starting point for your tax accounting calculations. However, you can enter as much or as little information onto this sheet as you think is required for your calculations. You can insert rows in each section.

The main part of the tax basis balance sheet is data entry, so that you can follow the layout/headings of your accounts on a line-by-line basis.

The

Opening position

columns must be populated in the first year of using the tax accounting sheets, but on roll forward to the subsequent period, these columns are automatically populated. The cells in the

Closing position

columns for carrying amount and tax base can be linked to amounts from other sheets in this computation. The amounts will automatically pull through once the relevant sheets are populated. These links will remain in the computation when the file is rolled forward.

A category for movement option must be selected for each populated row on this sheet. This can be found in column W.

There is also a section called

Tax items not present on balance sheet

. These lines are prepopulated and most of the tax bases in the closing position column are linked to the relevant disclosure schedules once they are inserted into the file.

These sheets are inserted and used to disclose details of other temporary differences or other permanent differences that will not be disclosed as separate line items on the Tax basis balance sheet (I3). The total from these sheets can then be linked to the Tax basis balance sheet (I3).

These sheets are inserted and used to disclose details for the transactions that contain permanent differences that are included in fixed assets for both book and tax values. The total from these sheets can then be linked to the Tax basis balance sheet (I3).

This sheet is inserted and used to disclose details for the transactions that contain permanent differences that are included in provisions. The balance check on this sheet is linked to the permanent difference column in the provisions sheet in the calculation. The total permanent adjustment can then be linked to the Tax basis balance sheet (I3).

This sheet links through the opening and closing balances for the temporary difference balances (after the initial recognition exemption) from the Tax basis balance sheet.

Most temporary differences are recognised in the income statement by default. If there are temporary differences which should be recognised in equity or OCI, you can manually enter these amounts in the columns provided.

If you have temporary differences that you do not want to recognise, you can do this by entering the amount that should not be recognised into the relevant

Not recognised

column(s).

This sheet shows lines from the Tax basis balance sheet (I3) and the Temporary differences (I4) sheets and uses the relevant tax rates to calculate deferred tax. The default tax rates used to calculate the temporary differences for the sheet can be overridden by changing the relevant tax rate on a line-by-line basis, by changing the relevant rate on the right-hand side of the sheet.

The balance check at the bottom of this sheet compares the deferred tax calculated in this sheet and the deferred tax that is disclosed on the balance sheet which comes from the trial balance. If these amounts agree this balance check will be in balance.

This sheet compares the current tax movement through the income statement as per the

Adjustment of profit

sheet and compares it to the deferred tax movement through the

Temporary differences

disclosed on the

Tax basis balance sheet (I3)

. Any differences between the current and deferred tax movements are taken to the

Proof of Tax

sheet where further analysis takes place.

The movements of each of the temporary differences calculated in the

Tax basis balance sheet

and allocated to a category for movement in I3 pulls through into the

Items recorded in adjustment to profit

,

Items not recorded in adjustment to profit

, and

Other items with specific treatment sections

. Each of the

Adjustment of profit

items that contains amounts in the temporary difference column pulls through to the

Reconciliation to adjustment to profit

section. The totals of these two sections must be in balance.

The Proof of tax sheet is usually automated for users during implementation. This sheet is used as the tax rate reconciliation in the calculation. The profit/loss per the income statement pulls through from the Income statement along with the tax charge per the income statement. The permanent items are then disclosed from other sheets in the calculation along with exempt amounts and amounts that are not recognized. Any differences are then calculated.

This sheet shows rates for deferred tax and if any rates need to be changed, they can be overridden. The

Tax account sheet

options shows different printing options for the tax accounting sheets. The lines under the

Disclosure captions for reconciling items

section are the lines that are shown under the category for movement column in the Tax basis balance sheet (I3).

This sheet helps calculate the temporary differences in all fixed assets. All the movements for book and tax allowances pulls through for all the fixed asset line items and shows a balance check.