Tax note and effective tax rate reconciliation

• Entity or group, period, main jurisdictions

  TextRequired

  ARDELYS_GROUP_CONSOLIDATED_20X6

• Accounting profit (profit before tax)

  Number

  20,000,000

• Applicable tax rate retained (%)

  Number

  25 %

  IFRS rule: rate giving the most relevant information (para. 85), basis of calculation disclosed (para. 81). Case data or entity choice: the rate itself.

• Tax expense reported (statement presenting profit or loss)

  Number

  5,170,000

  The IFRS 18 presentation amendments (paras. 77, 78, 81) have not been read: presentation is worded neutrally (statement presenting profit or loss).

• Current tax expense of the period (excluding Pillar Two)

  Number

  4,870,000

• Current tax expense related to Pillar Two income taxes (amount given by the case)

  Number

  180,000

  Case data: the computation of the top-up tax belongs to the Pillar Two legislation, outside IAS 12; only its separate disclosure is taught (para. 88B).

• Adjustments of current tax of prior periods (charges)

  Number

• Adjustments of current tax of prior periods (credits)

  Number

  150,000

• Deferred tax expense in profit or loss (“Deferred tax measurement and allocation”)

  Number

  270,000

• Deferred tax income in profit or loss (“Deferred tax measurement and allocation”)

  Number

• Reconciling items in tax amounts (sign + if they increase the expense)

  Table

  NON_DEDUCTIBLE_EXPENSES · PERMANENT · 300,000 | EXEMPT_INCOME · PERMANENT · -200,000 | FOREIGN_RATE_DIFFERENTIALS · RATE · -750,000 | UNRECOGNISED_LOSSES · DTA_NOT_RECOGNISED · 220,000 | UNCERTAIN_TAX_POSITIONS · CURRENT_TAX · 570,000 | PRIOR_PERIODS · PRIOR_PERIOD_ADJUSTMENT · -150,000 | PILLAR_TWO_TOP_UP_TAX · PILLAR_TWO · 180,000

  Input convention: each row in tax amount, signed (+ increases the expense, − decreases it); the sum explains the difference between expected tax and reported expense. The average effective rate is not computed automatically (no ratio engine).

• Movements in net deferred tax (net liability: +; origin profit or loss, other comprehensive income, equity, business combinations, exchange)

  Table

  PROFIT_OR_LOSS · 270,000 | OCI · 90,000 | EQUITY · -40,000

  Input convention: net liability positive; an increase in the net liability is positive, an increase in the net asset negative. The movements by origin feed the note.

• Deductible differences, losses and credits not recognised (amounts, expiry dates); differences relating to investments with no liability

  Text

• Pillar Two status: legislation enacted, in effect or not, jurisdictions concerned, progress of the assessment

  Text

  VARNESSA_IN_EFFECT_ESCALVIA_ENACTED_FROM_20X7

• Unresolved tax disputes and uncertain positions (“Uncertain tax treatments (IFRIC 23)”)

  Text

• Evidence obtained and referenced (category, document reference)

  EvidenceRequired

IAS 12 §5IAS 12 §6IAS 12 §58IAS 12 §77IAS 12IAS 12 §80

• Points examined

  ChecklistRequired

  • Tax expense = current tax + deferred tax
  • Major components disclosed separately
  • Possible components: current, prior adjustments, origination and reversal of differences, rate changes, benefits previously unrecognised, write-down of deferred tax assets, policies and errors
  • Tax expense on ordinary activities presented in profit or loss (wording before IFRS 18)
  • Tax on items recognised outside profit or loss excluded from the expense in profit or loss

IAS 12 §81IAS 12 §84IAS 12 §85

• Points examined

  ChecklistRequired

  • Numerical reconciliation: tax expense and accounting profit × applicable rate (or average effective rate and applicable rate)
  • Basis of calculation of the applicable rate disclosed
  • Applicable rate giving the most relevant information (often the domestic rate, comparable local taxes aggregated)
  • Changes in the applicable rate compared with the previous period explained
  • Factors making the relationship unusual identified (exempt income, non-deductible expenses, tax losses)

IAS 12 §71IAS 12 §74IAS 12 §78

• Points examined

  ChecklistRequired

  • Current tax offset only with an enforceable right and intention to settle net or simultaneously
  • Deferred tax offset under the offsetting conditions (“Group deferred tax”)
  • Exchange differences on foreign deferred tax: may be classified as deferred tax expense if more useful (wording before IFRS 18)

IAS 12 §4AIAS 12 §88AIAS 12 §88BIAS 12 §88CIAS 12 §88D

• Points examined

  ChecklistRequired

  • No deferred tax relating to Pillar Two income taxes, and no disclosure about them
  • Application of the exception disclosed
  • Pillar Two current tax disclosed separately
  • Legislation enacted but not yet in effect: known or reasonably estimable exposure
  • Qualitative and quantitative information (range possible) or progress of the assessment

IAS 12 §6IAS 12IAS 12 §81

• Expected tax (accounting profit × applicable rate)

  Calculation

  5,000,000

  Accounting profit (profit before tax) ; Applicable tax rate retained (%)

• Tax expense rebuilt from its components

  CalculationRequired

  5,170,000

  Current tax expense of the period (excluding Pillar Two) ; Current tax expense related to Pillar Two income taxes (amount given by the case) ; Adjustments of current tax of prior periods (charges) ; − Adjustments of current tax of prior periods (credits) ; Deferred tax expense in profit or loss (“Deferred tax measurement and allocation”) ; − Deferred tax income in profit or loss (“Deferred tax measurement and allocation”)

• Tax expense resulting from the reconciliation

  CalculationRequired

  5,170,000

  Expected tax (accounting profit × applicable rate) ; Reconciling items in tax amounts (sign + if they increase the expense) ; Tax expense reported (statement presenting profit or loss)

• Unexplained difference of the reconciliation (must be nil)

  Calculation

  0

  Expected tax (accounting profit × applicable rate) ; Reconciling items in tax amounts (sign + if they increase the expense) ; Tax expense reported (statement presenting profit or loss)

• Net deferred tax at the beginning of the period (net liability: +, net asset: −)

  Number

  1,400,000

• Net deferred tax at the end of the period per the ledger (net liability: +, net asset: −)

  Number

  1,720,000

• Net deferred tax at the end of the period recalculated

  CalculationRequired

  1,720,000

  Net deferred tax at the beginning of the period (net liability: +, net asset: −) ; Movements in net deferred tax (net liability: +; origin profit or loss, other comprehensive income, equity, business combinations, exchange) ; Net deferred tax at the end of the period per the ledger (net liability: +, net asset: −)

• Difference of the roll-forward (must be nil)

  Calculation

  0

  Net deferred tax at the beginning of the period (net liability: +, net asset: −) ; Movements in net deferred tax (net liability: +; origin profit or loss, other comprehensive income, equity, business combinations, exchange) ; Net deferred tax at the end of the period per the ledger (net liability: +, net asset: −)

• Pillar Two top-up tax: current tax of the period

  Entry

  Account	Debit	Credit
  Current tax expense (Pillar Two)	180,000
  Current tax liability		180,000

  Case data: amount of the top-up tax, computed under the Pillar Two legislation (computation outside IAS 12). Teaching assumption: current tax of the period recognised as an expense, with no instalment.

IAS 12 §81IAS 12IAS 12 §84IAS 12 §85IAS 12 §88IAS 12 §88CIAS 12 §88D

• Basis of the applicable rate

  JudgmentRequired

  Single rate retained by the entity

  Single rate retained by the entity / Rate combined from the rates of the jurisdictions

  Professional judgement: rate most relevant to users (para. 85), basis of calculation disclosed in the note (para. 81); this model prescribes no choice.

• Rationale: facts relied on, analysis, alternative rejected

  TextRequired

  PARENT_DOMESTIC_RATE_MOST_MEANINGFUL

• Form of the reconciliation

  JudgmentRequired

  In amounts (tax expense and expected tax)

  In amounts (tax expense and expected tax) / In rates (average effective rate and applicable rate)

• Rationale: facts relied on, analysis, alternative rejected

  TextRequired

  NUMERICAL_RECONCILIATION_IN_AMOUNTS

• Pillar Two situation to be disclosed

  JudgmentRequired

  Legislation in effect: current tax disclosed separately

  Not affected / Legislation in effect: current tax disclosed separately / Enacted, not yet in effect: exposure disclosed / Exposure not reasonably estimable: statement and progress

  Professional judgement: status of the legislation in each jurisdiction (case data) and whether the exposure is reasonably estimable (paras. 88C, 88D).

• Rationale: facts relied on, analysis, alternative rejected

  TextRequired

  VARNESSA_TOP_UP_TAX_IN_EFFECT_FOR_20X6

• Impact by caption, derived from the entries above (the Notes line refers to the disclosures)

  Table

IAS 12IAS 12 §81IAS 12IAS 12 §82AIAS 12IAS 12 §88IAS 12 §88AIAS 12 §88BIAS 12 §88CIAS 12 §88D

• Information prepared

  ChecklistRequired

  • Major components of tax expense
  • Tax relating to each component of other comprehensive income
  • Numerical reconciliation and basis of the applicable rate
  • Explanation of changes in the applicable rate
  • Deductible differences, losses and credits not recognised
  • Differences relating to investments with no liability recognised (aggregate amount)
  • Deferred tax by type of difference (statement of financial position and profit or loss)
  • Tax consequences of dividends proposed or declared, not recognised
  • Rate depending on distribution: nature and determinable amounts of the potential tax consequences
  • Asset depending on future profits or entity with a loss: amount and evidence
  • Tax contingencies (unresolved disputes) under IAS 37

• Pillar Two disclosures

  Checklist

  • Exception applied
  • Pillar Two current tax
  • Exposure before the legislation is in effect

• Draft tax note (own wording)

  TextRequired

  COMPONENTS_RECONCILIATION_PILLAR_TWO_UNRECOGNISED_LOSSES_CONTINGENCIES

• Paragraphs cited in this workpaper (verification status shown from the register)

  References

• The basis of the applicable rate is documentedPass
• The form of the reconciliation is documentedPass
• The Pillar Two situation is documentedPass
• The draft note is writtenPass
• The reconciliation ends at the reported expensePass
• The components rebuild the reported expensePass
• The roll-forward agrees with the ledgerPass
• The top-up tax entry balancesPass

Assets

0

Liabilities

180,000

Profit or loss

-180,000

OCI

0

Equity

-180,000

• Entity or group, period, main jurisdictions

  TextRequired

  VALDRISE_GROUP_CONSOLIDATED_20X7

• Accounting profit (profit before tax)

  Number

  9,200,000

• Applicable tax rate retained (%)

  Number

  25 %

  IFRS rule: rate giving the most relevant information (para. 85), basis of calculation disclosed (para. 81). Case data or entity choice: the rate itself.

• Tax expense reported (statement presenting profit or loss)

  Number

  3,090,000

  The IFRS 18 presentation amendments (paras. 77, 78, 81) have not been read: presentation is worded neutrally (statement presenting profit or loss).

• Current tax expense of the period (excluding Pillar Two)

  Number

  2,844,000

• Current tax expense related to Pillar Two income taxes (amount given by the case)

  Number

  140,000

  Case data: the computation of the top-up tax belongs to the Pillar Two legislation, outside IAS 12; only its separate disclosure is taught (para. 88B).

• Adjustments of current tax of prior periods (charges)

  Number

• Adjustments of current tax of prior periods (credits)

  Number

• Deferred tax expense in profit or loss (“Deferred tax measurement and allocation”)

  Number

  106,000

• Deferred tax income in profit or loss (“Deferred tax measurement and allocation”)

  Number

• Reconciling items in tax amounts (sign + if they increase the expense)

  Table

  NON_DEDUCTIBLE_FINES · PERMANENT · 50,000 | EXEMPT_DIVIDENDS · PERMANENT · -125,000 | RATE_CHANGE_EFFECTS · RATE_CHANGE · -39,000 | FOREIGN_RATE_DIFFERENTIALS · RATE_DIFFERENTIAL · 14,000 | LOSSES_OF_THE_YEAR_NOT_RECOGNISED · DTA_NOT_RECOGNISED · 100,000 | DTA_WRITE_DOWN · REASSESSMENT · 100,000 | TAX_ON_PLANNED_DISTRIBUTION · INVESTMENTS · 20,000 | PILLAR_TWO_TOP_UP_TAX · PILLAR_TWO · 140,000 | UNCERTAIN_TAX_POSITIONS · CURRENT_TAX · 530,000

  Input convention: each row in tax amount, signed (+ increases the expense, − decreases it); the sum explains the difference between expected tax and reported expense. The average effective rate is not computed automatically (no ratio engine).

• Movements in net deferred tax (net liability: +; origin profit or loss, other comprehensive income, equity, business combinations, exchange)

  Table

  PROFIT_OR_LOSS · 106,000 | OCI · 150,000 | EQUITY · -22,000 | BUSINESS_COMBINATIONS · 600,000

  Input convention: net liability positive; an increase in the net liability is positive, an increase in the net asset negative. The movements by origin feed the note.

• Deductible differences, losses and credits not recognised (amounts, expiry dates); differences relating to investments with no liability

  Text

  CORVANNE_LOSSES_AND_INVESTMENT_DIFFERENCES

• Pillar Two status: legislation enacted, in effect or not, jurisdictions concerned, progress of the assessment

  Text

  VESCARIA_IN_EFFECT_LUSTRANIA_ENACTED_FROM_20X9

• Unresolved tax disputes and uncertain positions (“Uncertain tax treatments (IFRIC 23)”)

  Text

• Evidence obtained and referenced (category, document reference)

  EvidenceRequired

IAS 12 §5IAS 12 §6IAS 12 §58IAS 12 §77IAS 12IAS 12 §80

• Points examined

  ChecklistRequired

  • Tax expense = current tax + deferred tax
  • Major components disclosed separately
  • Possible components: current, prior adjustments, origination and reversal of differences, rate changes, benefits previously unrecognised, write-down of deferred tax assets, policies and errors
  • Tax expense on ordinary activities presented in profit or loss (wording before IFRS 18)
  • Tax on items recognised outside profit or loss excluded from the expense in profit or loss

IAS 12 §81IAS 12 §84IAS 12 §85

• Points examined

  ChecklistRequired

  • Numerical reconciliation: tax expense and accounting profit × applicable rate (or average effective rate and applicable rate)
  • Basis of calculation of the applicable rate disclosed
  • Applicable rate giving the most relevant information (often the domestic rate, comparable local taxes aggregated)
  • Changes in the applicable rate compared with the previous period explained
  • Factors making the relationship unusual identified (exempt income, non-deductible expenses, tax losses)

IAS 12 §71IAS 12 §74IAS 12 §78

• Points examined

  ChecklistRequired

  • Current tax offset only with an enforceable right and intention to settle net or simultaneously
  • Deferred tax offset under the offsetting conditions (“Group deferred tax”)
  • Exchange differences on foreign deferred tax: may be classified as deferred tax expense if more useful (wording before IFRS 18)

IAS 12 §4AIAS 12 §88AIAS 12 §88BIAS 12 §88CIAS 12 §88D

• Points examined

  ChecklistRequired

  • No deferred tax relating to Pillar Two income taxes, and no disclosure about them
  • Application of the exception disclosed
  • Pillar Two current tax disclosed separately
  • Legislation enacted but not yet in effect: known or reasonably estimable exposure
  • Qualitative and quantitative information (range possible) or progress of the assessment

IAS 12 §6IAS 12IAS 12 §81

• Expected tax (accounting profit × applicable rate)

  Calculation

  2,300,000

  Accounting profit (profit before tax) ; Applicable tax rate retained (%)

• Tax expense rebuilt from its components

  CalculationRequired

  3,090,000

  Current tax expense of the period (excluding Pillar Two) ; Current tax expense related to Pillar Two income taxes (amount given by the case) ; Adjustments of current tax of prior periods (charges) ; − Adjustments of current tax of prior periods (credits) ; Deferred tax expense in profit or loss (“Deferred tax measurement and allocation”) ; − Deferred tax income in profit or loss (“Deferred tax measurement and allocation”)

• Tax expense resulting from the reconciliation

  CalculationRequired

  3,090,000

  Expected tax (accounting profit × applicable rate) ; Reconciling items in tax amounts (sign + if they increase the expense) ; Tax expense reported (statement presenting profit or loss)

• Unexplained difference of the reconciliation (must be nil)

  Calculation

  0

  Expected tax (accounting profit × applicable rate) ; Reconciling items in tax amounts (sign + if they increase the expense) ; Tax expense reported (statement presenting profit or loss)

• Net deferred tax at the beginning of the period (net liability: +, net asset: −)

  Number

  -40,000

• Net deferred tax at the end of the period per the ledger (net liability: +, net asset: −)

  Number

  794,000

• Net deferred tax at the end of the period recalculated

  CalculationRequired

  794,000

  Net deferred tax at the beginning of the period (net liability: +, net asset: −) ; Movements in net deferred tax (net liability: +; origin profit or loss, other comprehensive income, equity, business combinations, exchange) ; Net deferred tax at the end of the period per the ledger (net liability: +, net asset: −)

• Difference of the roll-forward (must be nil)

  Calculation

  0

  Net deferred tax at the beginning of the period (net liability: +, net asset: −) ; Movements in net deferred tax (net liability: +; origin profit or loss, other comprehensive income, equity, business combinations, exchange) ; Net deferred tax at the end of the period per the ledger (net liability: +, net asset: −)

• Pillar Two top-up tax: current tax of the period

  Entry

  Account	Debit	Credit
  Current tax expense (Pillar Two)	140,000
  Current tax liability		140,000

  Case data: amount of the top-up tax, computed under the Pillar Two legislation (computation outside IAS 12). Teaching assumption: current tax of the period recognised as an expense, with no instalment.

IAS 12 §81IAS 12IAS 12 §84IAS 12 §85IAS 12 §88IAS 12 §88CIAS 12 §88D

• Basis of the applicable rate

  JudgmentRequired

  Single rate retained by the entity

  Single rate retained by the entity / Rate combined from the rates of the jurisdictions

  Professional judgement: rate most relevant to users (para. 85), basis of calculation disclosed in the note (para. 81); this model prescribes no choice.

• Rationale: facts relied on, analysis, alternative rejected

  TextRequired

  PARENT_DOMESTIC_RATE

• Form of the reconciliation

  JudgmentRequired

  In amounts (tax expense and expected tax)

  In amounts (tax expense and expected tax) / In rates (average effective rate and applicable rate)

• Rationale: facts relied on, analysis, alternative rejected

  TextRequired

  NUMERICAL_RECONCILIATION_IN_AMOUNTS

• Pillar Two situation to be disclosed

  JudgmentRequired

  Legislation in effect: current tax disclosed separately

  Not affected / Legislation in effect: current tax disclosed separately / Enacted, not yet in effect: exposure disclosed / Exposure not reasonably estimable: statement and progress

  Professional judgement: status of the legislation in each jurisdiction (case data) and whether the exposure is reasonably estimable (paras. 88C, 88D).

• Rationale: facts relied on, analysis, alternative rejected

  TextRequired

  VESCARIAN_TOP_UP_TAX_IN_EFFECT

• Impact by caption, derived from the entries above (the Notes line refers to the disclosures)

  Table

IAS 12IAS 12 §81IAS 12IAS 12 §82AIAS 12IAS 12 §88IAS 12 §88AIAS 12 §88BIAS 12 §88CIAS 12 §88D

• Information prepared

  ChecklistRequired

  • Major components of tax expense
  • Tax relating to each component of other comprehensive income
  • Numerical reconciliation and basis of the applicable rate
  • Explanation of changes in the applicable rate
  • Deductible differences, losses and credits not recognised
  • Differences relating to investments with no liability recognised (aggregate amount)
  • Deferred tax by type of difference (statement of financial position and profit or loss)
  • Tax consequences of dividends proposed or declared, not recognised
  • Rate depending on distribution: nature and determinable amounts of the potential tax consequences
  • Asset depending on future profits or entity with a loss: amount and evidence
  • Tax contingencies (unresolved disputes) under IAS 37

• Pillar Two disclosures

  Checklist

  • Exception applied
  • Pillar Two current tax
  • Exposure before the legislation is in effect

• Draft tax note (own wording)

  TextRequired

  COMPONENTS_RECONCILIATION_BALANCES_UNRECOGNISED_PILLAR_TWO_CONTINGENCIES

• Paragraphs cited in this workpaper (verification status shown from the register)

  References

• The basis of the applicable rate is documentedPass
• The form of the reconciliation is documentedPass
• The Pillar Two situation is documentedPass
• The draft note is writtenPass
• The reconciliation ends at the reported expensePass
• The components rebuild the reported expensePass
• The roll-forward agrees with the ledgerPass
• The top-up tax entry balancesPass

Assets

0

Liabilities

140,000

Profit or loss

-140,000

OCI

0

Equity

-140,000