CERTYNEX IFRS ACADEMY

Aster SA pays a dividend of 500,000 to its ordinary shareholders, holders of equity instruments. This distribution gives rise to an income tax effect for Aster (case facts). Which standard decides how this tax effect is accounted for?

IAS 32, which requires the tax effect to be taken to equity with the distribution of which it is the consequence, whatever the tax rule.

IAS 32, which requires the tax effect to be taken to profit or loss, since tax is an expense of the year, whatever its cause.

IAS 12, which governs the income tax effect of a distribution to holders of equity instruments.

The tax effect is not recognised, the distribution being a transaction between the entity and its own shareholders.