The Financial Reporting Standards Council (FRSC) has approved on June 9, 2021 the adoption of amendments to IAS 12 Income Taxes, Deferred Tax related to Assets and Liabilities from a Single Transaction issued by the International Accounting Standards Board (IASB) in May 2021 as amendments to PAS 12 Income Taxes, Deferred Tax related to Assets and Liabilities from a Single Transaction.

The amendments narrow the scope of the initial recognition exception under PAS 12, so that it no longer applies to transactions that give rise to equal taxable and deductible temporary differences. The amendments also clarify that where payments that settle a liability are deductible for tax purposes, it is a matter of judgement (having considered the applicable tax law) whether such deductions are attributable for tax purposes to the liability recognized in the financial statements (and interest expense) or to the related asset component (and interest expense).

An entity shall apply these amendments to annual reporting periods beginning on or after January 1, 2023. Earlier application of these amendments is permitted.

The preface to the foregoing amendments can be accessed here.