Income Taxes

Current Status Next Steps

Exposure Draft is being developed.

The AcSB plans to issue the Exposure Draft in the third quarter of 2018.

BACKGROUND

This project proposes to amend Section 3465 to remove an outdated example on “eligible capital expenditures”, and to remove the requirement to present future income tax assets and liabilities as current and non-current when the future income taxes method is applied.

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The eligible capital property (ECP) rules in Section 14 of the Income Tax Act were repealed and replaced by new Class 14.1 of Schedule II to the Income Tax Regulations, effective on January 1, 2017. The example in paragraph 3465.14(f) of the existing standard, provides guidance on accounting for ECP, which is no longer applicable.

Section 3465 requires that future income tax assets and liabilities be presented as current and non-current when the future income taxes method is applied. A recent amendment to U.S Generally Accepted Accounting Principles (US GAAP) eliminated the requirement to segregate deferred tax assets and liabilities into current and non-current components.

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PROJECT NEWS & DECISION SUMMARIES

AcSB Decision Summary – June 19, 2018
The Board considered the advice of its Private Enterprise Advisory Committee relating to the proposals, and decided:

  • to remove the example in Section 3465, which is no longer applicable given recent changes to the Income Tax Act (Canada); and
  • to require enterprises using the future income taxes method to present future income tax assets and liabilities as non-current and to disclose the amount of future income tax assets and liabilities.

The Board also considered a communication plan for the forthcoming exposure draft and decided on its outreach activities with stakeholders. The Board directed staff to begin the balloting process for the proposals and plans to issue an exposure draft in September 2018 with comments due in December 2018.

AcSB Decision Summary – March 20-21, 2018
The Board also considered the Committee’s advice relating to issues raised by stakeholders through its outreach activities and decided:

  • to expose for public comment the proposals to delete as narrow-scope amendments:
    • the example in Section 3465, Income Taxes, that is no longer applicable given recent changes to the Income Tax Act (Canada) and
    • the requirement to segregate future tax assets and liabilities into current and non-current portions when the future tax method is applied.

Private Enterprise Advisory Committee Notes – May 3, 2018
Future income tax
The Committee considered staff’s proposals on the following two amendments in Section 3465, Income Taxes:

  • Delete example (f) in paragraph 3465.14, which is no longer applicable given recent changes to the Income Tax Act (Canada).
  • Remove the requirement to segregate future tax assets and liabilities into current and non-current portions when the future tax method is applied.

The Committee noted that presenting all future taxes as non-current may affect the financial information reported in some situations. For example, future tax liabilities resulting from holdbacks in the construction industry, which typically unwind in 12-18 months, would no longer appear as current liabilities. The Committee advised the Board to consider supplementing the classification of future tax proposal with additional note-disclosure requirements.

 

Disclaimer: This project summary has been prepared for information purposes only. Decisions reported are tentative and reflect only the current status of discussions on this project, which may change after further Board deliberations. Decisions to publish Handbook material are final only after a formal ballot process.