GLIMPSE OF A CPA'S MIND

OVERVIEW This is effective for financial years beginning on or after January 1, 2019, IFRIC 23 ‘Uncertainty Over Income Tax Treatments ’ (‘the Interpretation’) requires entities to consider the potential for adverse tax determinations being made by taxing authorities while under a hypothetical tax review – and record a liability (and expense) where such a finding is considered “probable”. Many entities may not experience a financial impact as a result of this, but the Interpretation remains applicable and certain disclosures may be appropriate. WHAT TAXES DOES IFRIC 23 APPLY TO? IFRIC 23 applies to any tax that is an ‘income tax’ as defined by paragraph 2 of PAS 12 ‘Income Taxes’, which states that income taxes include all domestic and foreign taxes which are based on taxable profits. Income taxes also include taxes, such as withholding taxes, which are payable by a subsidiary, associate or joint arrangement on distributions to the reporting entity.’ INITIAL TAX ASSESSMENT Once a tax