CERTYNEX IFRS ACADEMY

At 30 June, the finance director of Delmar SA proposes to calculate the deferred tax of the half-year at the estimated annual effective rate of 27%, "since IAS 34 provides for this rate". What is the relationship between the estimate of the annual effective tax rate provided for by IAS 34 and the rules of IAS 12?

The annual rate estimate in IAS 34 replaces the rules of IAS 12 on deferred tax at each interim date, deferred tax being calculated at the estimated rate for the year.

IAS 12 does not apply to interim statements, the tax expense there being a simple estimate with no accounting for current or deferred tax.

The estimated annual rate of IAS 34 applies to deferred tax assets, while current tax is recognised at the statutory rate at each interim date, without estimation.

IAS 34 deals with the timing of the tax expense (estimated annual effective rate applied to the profit of the period); the accounting for tax is a matter for IAS 12.