Deferred tax assets and liabilities – Current or Non-current?

Authored by Carmen Ridley (Principal, Australian Financial Reporting Solutions www.afrs.com.au), our content expert for the CaseWare Financials IFRS product, designed specifically for Australian accountants. Originally written in Feb, 2016

If deferred tax assets (liabilities) are expected to be utilised (extinguished) in the next 12 months, should they be classified as current assets (liabilities)?

Ordinarily an asset / liability would be classified in accordance with the definition of a current asset / liability in AASB 101 Presentation of Financial Statements.

In the case of deferred tax assets / liabilities. Paragraph 56 of AASB 101 states:

‘When an entity presents current and non-current assets and current and non-current liabilities as separate classifications in its statement of financial position, it shall not classify deferred tax assets (liabilities) as current assets (liabilities)’.

— Paragraph 56 of AASB 101

Regardless of when a deferred tax balance is expected to be settled / extinguished all deferred tax assets and liabilities are shown as non-current.

In addition, these balances are not discounted per AASB 112 Income Taxes.

Please contact Carmen Ridley via cridley@afrs.com.au if you have any questions.