On or about 2 October 2019, the Accounting Standards Council (ASC)_ has submitted its comment on ED/2019/5 Amendments to IFRS 17 to the IASB.
The ASC are generally supportive of the proposed amendments, subject to their comments as stated in the comment letter.
The ASC recommend that the IASB should consider addressing the reassessment of deferred tax asset and liability collectively for transactions within the scope of the ED. In particular, the IASB could clarify that:
- at initial recognition, an entity does not apply the recognition exemption to the deferred tax asset, but recognises the deferred tax asset only to the extent permitted by the recoverability requirement. Therefore, the entity does not apply the recognition exemption to any portion of the deferred tax liability for which it does not recognise a corresponding deferred tax asset
- in subsequent periods, the entity reassesses the unrecognised deferred tax asset and liability. However, the entity recognises any unrecognised deferred tax liability only to the extent of a recovery of its corresponding unrecognised deferred tax asset at initial recognition.
The IASB should at least consider: (a) explaining that an entity should reach the same reassessment conclusion for the deferred tax liability and its corresponding deferred tax asset; and (b) amending the Basis of Conclusions to avoid implying otherwise, if it was to decide against addressing reassessment.
Source: ASC website, 2 October 2019