A liability that results from income that has already been earned for accounting purposes but not for tax purposes.
A tax expense which has been charged to the profit and loss account but which is not payable for over 12 months.
Deferred tax is only stated in the consolidated accounts in addition to payable tax from the individual accounts. It is composed of: corrections of payable tax from the individual accounts for reasons of treatments which conform to rules of consolidation; tax savings or future tax charges which result from a future difference between the fiscal profit and the accounting result on operations. This difference is called 'temporary difference'.
Estimated future tax consequences of transactions and events recognised in the financial statements of the current and previous periods. [FRS 19, para. 2
Amount allocated to cover tax liabilities that have not yet been paid.
An accounting entry that recognises that taxable profits are different from accounting profits by smoothing out the effective tax rate over time. In the water industry, by virtue of its long life assets, the reversal of timing differences arising between taxable profits and accounting profits is permitted to be discounted thereby recognizing the time value of money.
Deferred tax is an accounting term, meaning future tax liability or asset, resulting from temporary differences between book (accounting) value of assets and liabilities, and their tax value. This arises due to differences between accounting for shareholders and tax accounting.
