The transitional measures initially deal with four situations:
- An amount treated as a trading receipt under IFRS and which was also treated as a trading receipt in computing profits or gains under Indian GAAP, e.g. income originally taxed in 2007 which has been deferred until 2008, is regarded as a ‘deductible amount’. An example might include the deferral of income caused by the recognition of upfront fees or commissions by a financial institution over the life of a loan rather than in year one.
- An expense that would have been deductible if incurred in an IFRS period (e.g. 2008) provided it is not deductible on any other basis is also regarded as a ‘deductible amount’. This provision could apply where expenditure previously deferred has now been recognised as an expense of an earlier (pre-IFRS) period or where there has been an increase in the quantum of an expense previously recognised.
- Income that would have been taxed if it had been received in an IFRS period (e.g. 2008) but which has not been taxed in any period is regarded as a ‘taxable amount’. This provision would apply where the application of income recognition rules require income to be accounted for earlier than previously.
- An expense deductible in IFRS periods (e.g. 2008) which was also deductible under Irish GAAP is regarded as a ‘taxable amount’. This provision, aimed at preventing double deductions, would apply where tax deductible expenditure is required under IFRS to be deferred and recognised in later periods.
- An amount treated as a trading receipt under IFRS and which was also treated as a trading receipt in computing profits or gains under Indian GAAP, e.g. income originally taxed in 2007 which has been deferred until 2008, is regarded as a ‘deductible amount’. An example might include the deferral of income caused by the recognition of upfront fees or commissions by a financial institution over the life of a loan rather than in year one.
- An expense that would have been deductible if incurred in an IFRS period (e.g. 2008) provided it is not deductible on any other basis is also regarded as a ‘deductible amount’. This provision could apply where expenditure previously deferred has now been recognised as an expense of an earlier (pre-IFRS) period or where there has been an increase in the quantum of an expense previously recognised.
- Income that would have been taxed if it had been received in an IFRS period (e.g. 2008) but which has not been taxed in any period is regarded as a ‘taxable amount’. This provision would apply where the application of income recognition rules require income to be accounted for earlier than previously.
- An expense deductible in IFRS periods (e.g. 2008) which was also deductible under Irish GAAP is regarded as a ‘taxable amount’. This provision, aimed at preventing double deductions, would apply where tax deductible expenditure is required under IFRS to be deferred and recognised in later periods.
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