BC33A In Annual Improvements 2009-2011 Cycle (issued in May 2012) the Board addressed perceived inconsistencies between IAS 12 Income Taxes and IAS 32 Financial Instruments: Presentation with regards to recognising the consequences of income tax relating to distributions to holders of an equity instrument and to transaction costs of an equity transaction. Paragraph 52B of IAS 12 requires the recognition of the income tax consequences of dividends in profit or loss except when the circumstances described in paragraph 58(a) and (b) of IAS 12 arise. However, paragraph 35 of IAS 32 required the recognition of income tax relating to distributions to holders of an equity instrument in equity (prior to the amendment). [Annual Improvements to IFRS Standards 2015-2017 Cycle, issued in December 2017, deleted paragraph 52B of IAS 12. The requirements previously specified in that paragraph were moved to paragraph 57A of IAS 12.]

BC33B The Board noted that the intention of IAS 32 was to follow the requirements in IAS 12 for accounting for income tax relating to distributions to holders of an equity instrument and to transaction costs of an equity transaction. Consequently, the Board decided to add paragraph 35A to IAS 32 to clarify this intention.