Deferred tax converts differences between accounting and tax measurement into a financial statement asset or liability. For CFOs, the key questions are: what created the temporary difference, will it reverse, is a deferred tax asset recoverable, and is the calculation aligned with tax reporting such as JPK_CIT.
What is a temporary difference?
A temporary difference exists when the carrying amount of an asset or liability differs from its tax base. IAS 12 requires deferred tax recognition when that difference will affect taxable profit in future periods, subject to recognition criteria.
Practical examples
| Area | Temporary difference | Deferred tax effect |
|---|---|---|
| Depreciation | Tax depreciation faster than accounting depreciation | Deferred tax liability |
| Leases | IFRS 16 right-of-use asset and lease liability differ from tax treatment | Asset and liability analysis required |
| Provisions | Accounting provision not yet tax deductible | Deferred tax asset |
| Tax loss | Loss available for future utilisation | Deferred tax asset if recoverable |
Deferred tax asset recoverability
A deferred tax asset is not automatic. Management must demonstrate probable future taxable profits, reversal of taxable temporary differences or tax planning opportunities. A history of losses increases the evidence threshold.
JPK_CIT and data quality
JPK_CIT increases the importance of reconciling accounting values, tax bases, permanent differences and temporary differences. If the chart of accounts does not separate tax treatment, deferred tax becomes a manual and error-prone exercise.
Why CFOs should care
Deferred tax affects net result, equity, effective tax rate, bank covenants and group reporting packs. It should be reviewed before audit fieldwork, not after consolidation deadlines.
Frequently asked questions
Need an IAS 12 review?
JMFC supports deferred tax calculations, recoverability memos and group reporting reconciliations.