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The Interpretations Committee decided to propose an amendment to IAS 12 Income Taxes

 22 March 2016


IAS 12 Income Taxes—Accounting for income tax consequences of payments on financial instruments classified as equity (Agenda Paper 5)

The Interpretations Committee continued its discussions on the presentation of income tax relating to tax deductible payments on financial instruments classified as equity. The Interpretations Committee observed that the circumstances to which the requirements in paragraph 52B of IAS 12 Income Taxes apply are unclear. Nonetheless, the Interpretations Committee decided that the applicability of the requirements in paragraph 52B relating to the presentation of any income tax consequences of dividends should not be limited to only those circumstances described in paragraph 52A (ie circumstances in which there are different tax rates for distributed and undistributed profits).

Consequently, the Interpretations Committee decided to propose an amendment to IAS 12 to clarify that the presentation requirements in paragraph 52B of IAS 12 apply to all payments on financial instruments classified as equity that are distributions of profits, and are not limited to the circumstances described in paragraph 52A of IAS 12.

Next steps

The Board will consider the amendment proposed by the Interpretations Committee at a future meeting.