CERTYNEX IFRS ACADEMY

Mérandol has recognised a litigation provision of 70,000, deductible for tax only when paid (case data). In its tax base schedule, the accountant shows a tax base of 70,000 for this provision, 'the amount that will be deducted'. Where is the error?

There is no error: the tax base of a liability is the amount that will be deductible.

The tax base is the carrying amount less future deductions, i.e. nil, not 70,000.

A provision has no tax base: it should simply not appear in the tax base schedule.

The tax base should have been 70,000 multiplied by the tax rate.