Interpretation 23 approved by AASB on accounting for uncertain tax treatments
The Australian Accounting Standards Board (AASB) approved IFRIC 23 Uncertainty over Income Tax Treatments on 3 August 2017 as Interpretation 23 in Australia.
Effective for annual periods beginning on or after 1 January 2019, Interpretation 23 can now be adopted by Australian entities in earlier periods. However, due to the nature of its requirements (discussed below), we do not anticipate many entities early adopting this interpretation.
Interpretation 23 requires entities to calculate the current tax liability in their financial statements as if the tax authorities were going to perform a tax audit, and the tax authorities knew all the facts and circumstances about the entity’s tax position.
This could prove a fortuitous development for the ATO, with entities having to disclose key estimates and judgements regarding the determination of uncertain tax positions
For more information on the requirements of Interpretation 23, please refer to our July 2017 Accounting News.