BC71 In May 2021 the Board issued Deferred Tax related to Assets and Liabilities arising from a Single Transaction. The amendments narrowed the scope of the recognition exemption in paragraphs 15 and 24 of IAS 12 (recognition exemption) so that it no longer applies to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences.

BC72 The amendments were issued in response to a recommendation from the Interpretations Committee. Research conducted by the Interpretations Committee indicated that views differed on whether the recognition exemption applied to transactions, such as leases, that lead to the recognition of an asset and liability. These differing views resulted in entities accounting for deferred tax on such transactions in different ways, reducing comparability between their financial statements.

BC73 For simplicity, paragraphs BC74-BC91 explain the basis for the amendments using leases as an example. The explanation applies equally to other transactions affected by the amendments, such as decommissioning, restoration and similar liabilities (decommissioning obligations) and the corresponding amounts recognised as part of the cost of the related asset.