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Introduction
 
The objective of accounting for deferred assets and liabilities is to provide useful information to the users to assess the entity’s future tax consequences as at reporting date. These future tax consequences arose because an entity’s past transactions and events may have caused the entity to pay more or less income tax or a refund from tax authority in the future periods.
 
The accounting principles for recognising, measuring, presenting and disclosing deferred taxation are inherently complex, and are directly related to both the differential in the accounting treatments and tax treatments of a particular asset, liability, income and expense. Both the key elements above (FRSs/IFRSs and tax law) are constantly changing which added to the complexity of accounting for deferred taxation. In addition, a group of entities with foreign operations, the deferred tax computation is made even more challenging due to myriad of tax treatments in different tax jurisdictions.
 
 
 
Programme Objectives
 
The main objective of this seminar is to equip preparers of financial statements with sound knowledge of the principles of FRS/IAS 12 and the skill to apply their technical knowledge in different tax jurisdictions as well as in changing tax environments. 
 
Participants will be exposed to the more difficult aspects of deferred tax computation for complex transactions and events that occurred in practice. The workshop introduces practical tips and methodologies of setting up appropriate working papers for computing deferred tax for different types of complex transactions and events listed in the outlines.

Programme Outline

• Properties
  • Understanding the deferred tax effects on the following accounting issues:
    • Income tax based on use of property
    • Capital gain tax based on sale of property
    • Interaction between income tax and capital gain tax on property
    • Depreciable and non depreciable properties
    • Property with capital allowance and balancing charge
    • Impairment and accretion of value of property
  • Handling different accounting policies:
    • Cost Model
    • Revaluation Model
    • Fair Value Model
    • Held for sale
  • Types of property covered:
    • Freehold land and building
    • Leasehold land and building
    • Building with/without capital allowance
    • Investment properties

 

• Financial Instruments
  • Understanding the effect of deferred tax on changes in fair value:
    • Held for trading financial assets at fair value through profit or loss
    • Available for sale financial assets at fair value through other comprehensive income
  • Deferred tax effect on financial assets and liability accounted for using amortised cost method:
    • Intercompany lending and borrowing
    • Lending and borrowing at below market interest rate
    • Zero coupon bonds
  • Deferred tax effect on hybrid financial instruments
  • Deferred tax effect on impairment of financial assets:
    • Individually assessed and
    • Collectively assessed

 

• Business Combinations and Consolidated Financial Statements
  • Deferred tax effect on transfer of assets between related companies
  • The effect of deferred tax on business combinations:
    • Fair value adjustment and its impact on consolidated goodwill
    • Acquiree’s losses
  • Deferred tax at consolidated financial statements:
    • Elimination of unrealised profits

 

• Tax Losses and Tax incentives
  • Decision to recognise deferred tax assets arising from tax losses and tax incentives
  • Dealing with deferred tax on:
    • Origination of tax losses
    • Tax losses brought not recognised as deferred tax asset
    • Utilisation of tax losses brought forward
    • Recognition of deferred tax asset from tax losses brought
  • Reconciliation of “profit before tax multiply by applicable tax rate” to “accounting profit” for loss making entities

 

• Other Complex Deferred Tax Issues
  • Changing tax rates in different accounting periods
  • Income taxed at different tax rate
  • Capital Allowance Restriction on Non-Commercial Vehicles
  • Deferred tax effect on:
    • Hire Purchase contract
    • Leasing contract (operating and finance lease)
  • Deferred tax effect on Impairment of:
    • Inventories (lower of cost and net realisable value)
    • Property, plant and equipment
  • Presenting other comprehensive income (OCI):
    • Presenting deferred tax relating to OCI
    • Presenting deferred tax relating to reclassification adjustments of OCI

 
Training Methodology
Lecture style, with practical illustrations, technical flow-charts, conceptual “mind maps” and interactive discussions.
 
Closing Date for Registration
1 week before programme or until full enrolment

Intended For

This programme is suitable for all Finance Professionals, Audit Professionals, Members of Audit Committee, Finance Directors and Regulators. Those who are keen on attending a practical course that explains the complex deferred tax treatment on certain transactions and events (especially for deferred taxation on properties) are welcome to attend.

Programme Facilitator(s)