What are deferred tax assets and liabilities?
Deferred taxation giving rise to deferred tax assets or liabilities. It stems: • either from differences in periods in which the income or cost is recognised for tax and accounting purposes; • or from differences between the taxable and book values of assets and liabilities. On the income statement, certain revenues and charges are recognised in different periods for the purpose of calculating pre-tax accounting profit and taxable profit. In some cases, the difference may be temporary due to the method used to derive taxable profit from pre-tax accounting profit. For instance, a charge has been recognised in the accounts, but is not yet deductible for tax purposes (e.g., employee profit-sharing in some countries); or vice versa. The same may apply to certain types of revenue. Such differences are known as timing differences. In other circumstances, the differences may be definitive or permanent; i.e., for revenue or charges that will never be taken into account in the computation of ta
