Income Taxes

IASB Income Taxes exposure draft: considerations for Canadian companies

In late March, the International Accounting Standards Board issued an exposure draft proposing amendments to accounting for income taxes. The comment deadline is July 31, 2009, with a final standard expected to be issued in 2010. This exposure draft is a culmination of a number of years of work on the part of IASB and FASB. The FASB have indicated that they will issue the IASB’s ED as an invitation to comment and, depending on comments received, may undertake a project to make similar amendments to US GAAP.

The issue and effective dates of this new standard are important for Canadian companies looking ahead to IFRS implementation. Under the transitional rules of IFRS 1, a first time adopter is required to adopt the IFRS that are in effect at the end of the year of adoption. So a calendar year Canadian company that is not early adopting would look to the IFRS standards that are in effect as of December 31, 2011. Depending on when the income taxes standard is released and effective, a Canadian company may be required to adopt the new standards or may have a choice of adopting the current version of IAS 12 and then changing to the new standard.