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[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section][et_pb_section admin_label=”Section” fullwidth=”off” specialty=”off”][et_pb_row admin_label=”Row”][et_pb_column type=”1_2″][et_pb_text admin_label=”Text” background_layout=”light” text_orientation=”center” text_font_size=”14″ use_border_color=”off” border_color=”#ffffff” border_style=”solid”] [button link=”http://www.frs102.com/members/premium-toolkit/” type=”big” color=”red”] Return to Main Index[/button] [/et_pb_text][/et_pb_column][et_pb_column type=”1_2″][et_pb_text admin_label=”Text” background_layout=”light” text_orientation=”center” text_font_size=”14″ use_border_color=”off” border_color=”#ffffff” border_style=”solid”] [button link=”http://frs102.com/members/premium-toolkit/section-29/” type=”big” color=”red”] Return to Section 29 Home[/button] [/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section][et_pb_section admin_label=”Section” fullwidth=”off” specialty=”off” transparent_background=”off” allow_player_pause=”off” inner_shadow=”off” parallax=”off” parallax_method=”off” padding_mobile=”off” make_fullwidth=”off” use_custom_width=”off” width_unit=”on” make_equal=”off” use_custom_gutter=”off” gutter_width=”3″][et_pb_row admin_label=”Row”][et_pb_column type=”4_4″][et_pb_text admin_label=”Main Body Text” background_layout=”light” text_orientation=”justified” use_border_color=”off” border_color=”#ffffff” border_style=”solid”]Offsetting
Extract from FRS102: Section 29.24-29.24A
29.24 An entity shall offset current tax assets and current tax liabilities, if and only if, it has a legally enforceable right to set off the amounts and it intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.
29.24A An entity shall offset deferred tax assets and deferred tax liabilities if, and only if:
(a) the entity has a legally enforceable right to set off current tax assets against current tax liabilities; and
(b) the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.
OmniPro comment
See illustration of the points through examples below:
Example 21: Offset of current tax assets and liabilities
Company A owes tax for year 1 totaling CU10,000 which has not been paid but a refund is due for year 2 of CU5,000.
In the financial statements the net CU5,000 can be shown as a creditor in the notes to the financial statements. Netting is allowed as it is tax due to the same tax authority and there is a right of offset.
Example 22: Offset of current tax assets and liabilities
Company A owes tax for year 1 totaling CU10,000 to the UK tax authorities for its operations in the UK and a tax refund of CU2,000 is due from the Irish tax authorities.
In this instance no netting can occur. CU10,000 would be shown as a tax creditor and CU2,000 shown as a tax debtor.
Example 23: Offset of deferred tax assets and liabilities
Company A has deferred tax assets in relation to pension accruals but also has deferred tax liability with regard to accelerated capital allowances. All of these are for the same tax authorities.
In this case netting can occur as there is a legal right to net these off.
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