CERTYNEX IFRS ACADEMY

The equipment hirer Brissange has received 15,000 of security deposits from customers, recognised as liabilities and repayable at the end of the contracts. Under tax law (case data), these deposits are neither taxed when received nor deductible when repaid. Which conclusion should be adopted?

Nil tax base, since the deposits will never be deductible: temporary difference of 15,000.

Tax base equal to 15,000 multiplied by the tax rate.

Tax base of 15,000, equal to the carrying amount: no temporary difference.

The deposits are not liabilities for tax purposes: they have no tax base.