The tax effect of distributions (reference to IAS 12)

Learning objectives

• Explain that the income tax effects of distributions to holders of equity instruments and of transaction costs follow IAS 12.L3
• Analyse where to recognise the income tax effect of a distribution depending on the component concerned.L3

Normative references

• IAS 32 §35AIncome tax relating to distributions to holders of equity instruments and to transaction costs of an equity transaction is accounted for in accordance with IAS 12.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

1 question

• 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?L3