Change in tax status (SIC-25)

Learning objectives

• Determine where to recognise the effects of a change in tax status (profit or loss, except for items previously recognised outside profit or loss).L2, L3
• Calculate the remeasurement of deferred tax balances following a change in tax status.L3

Normative references

The syntheses of the reference register are written in French: only the paragraph reference is shown here.

9 questions

• The tax consequences of a change in the tax status of an entity or its shareholders are recognised in profit or loss, unless they relate to transactions or events recognised directly in equity or in other comprehensive income.L2
• A change in tax status can only alter deferred tax assets and liabilities, never current tax.L2
• Which of the following events is an example of a change in tax status covered by SIC-25?L2
• Its initial public offering makes Hublande lose a favourable tax regime; its deferred tax liability, arising from accelerated tax depreciation, increases. Where does Hublande recognise this increase?L2
• Itravelle enjoyed a reduced rate of {old_rate}% reserved for unlisted companies. After its initial public offering, its differences will be taxed at {new_rate}% (legislation in the case). Its taxable differences of {difference} all arise from accelerated tax depreciation. Compute the deferred tax liability after the change and the expense recognised in profit or loss.L3
• Jessonne's controlling shareholder moves its head office abroad; Jessonne loses a group tax regime and its differences will be taxed at {new_rate}% instead of {old_rate}% (legislation in the case). Its taxable differences comprise {pl_differences} arising from accelerated tax depreciation and {oci_differences} arising from a revaluation recognised in OCI. Compute the effect in profit or loss and the effect in OCI.L3
• Following a restructuring of its equity, Kaprelle loses a tax incentive: its taxable differences of {difference}, arising from accelerated tax depreciation, will be taxed at {new_rate}% instead of {old_rate}% (legislation in the case). Record the entry.L3
• In October 20X5, following the listing of its shares, Lauvrine becomes eligible for a more favourable tax regime (legislation in the case): its 20X5 current tax decreases immediately and its deferred tax assets, arising from provisions recognised in profit or loss, are remeasured downwards at the new rate. How does it recognise these two effects?L3
• Mergance's only deferred tax liability relates to a building revaluation recognised in OCI (difference of 600,000). A restructuring of its equity makes it lose a favourable regime: the applicable rate rises from 20% to 25% (legislation in the case). How is the 30,000 increase recognised?L3