IAS 12Chapter 9Lesson 2
Share-based payment: future deduction and excess in equity
Step 1 of 9Learning objectives
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In some jurisdictions, an entity receives a tax deduction for remuneration paid in shares or options, whose amount and timing differ from the accounting expense. When the future deduction is not known at the reporting date, it is estimated based on the information available. If the (estimated) deduction exceeds the cumulative remuneration expense, the tax on the excess is recognised directly in equity, the rest in profit or loss.
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Learning objectives
- Explain why a share option plan can create a deferred tax asset.
- Calculate the deferred tax asset of a share option plan from the future deduction estimated at the reporting date.
- Split the tax benefit between profit or loss (up to the cumulative expense) and equity (excess).