IFRS 2Chapter 9Lesson 1
The 2016 amendments: net settlement for withholding tax and moving from cash to equity
Step 1 of 4Learning objectives
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A net settlement clause for withholding tax does not change equity-settled classification; when an award moves from cash-settled to equity-settled, the liability is derecognised and the difference from the equity recognised goes through profit or loss.
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Learning objectives
- Recall that the credit side depends on the initial classification as equity-settled or cash-settled.
- Explain that the net settlement clause for withholding tax does not lead to cash-settled classification and that the tax payment is deducted from equity.
- Calculate the amount withheld and the net number of instruments delivered, and record the payment to the tax authority.
- Record the modification of a cash-settled award into an equity-settled award, with the difference in profit or loss.