What is deferred tax liability in accounting? Deferred tax liabilities
The rules in accordance with which income and expenses are recorded for taxation and financial reporting purposes have a number of differences. In this regard, the amounts reflected in some documents do not coincide with the indicators of others. Accordingly, difficulties often arise when preparing reports.
PBU 18/02
This provision was introduced to reflect differences in tax amounts in reporting. PBU differentiates indicators into permanent and temporary. The first includes income/expenses that are reflected in accounting, but are never taken into account in calculating the tax base. They can also be taken into account when determining the latter, but are not subject to recording in accounting documentation. Temporary are income/expenses that are shown in reporting in one period, but for taxation purposes are accepted in another time period. As a result of these differences, a deferred tax liability arises. This PBU also provides for a certain procedure for reflecting deductions from profits. Conditional expense/income is equal to the product of the payment rate to the budget and The adjustment of this indicator is affected by deferred tax assets and deferred tax liabilities, as well as permanent differences. As a result, the amount that is reflected in the declaration is determined.
Terminology
The deferred tax liability is that part of the contribution to the budget, which in the next period should lead to an increase in the payment amount. For brevity, in practice the abbreviation ONO is used. A deferred tax liability is a temporary difference that arises if income before taxation is greater than in the return. To determine the indicator, the formula is used:
IT = profit deduction rate x temporary difference.
Deferred tax liability: account
The accounting documentation provides for a special item under which IT is reflected. This is the count. 77. Deferred tax liabilities on the balance sheet are shown on line 1420. In the loss/profit statement, this value is reflected on line 2430.
SHE
If the deductible difference is multiplied by the deduction rate, the result is an amount that has already been paid to the budget, but is subject to credit in the upcoming period. This value is called a deferred asset. SHE is the positive difference between the current, actual deduction and the conditional expense in the amount calculated from profit. It is written off from the account. 09. If depreciation is provided for in the future cycle, then in accounting it is not accrued on fixed assets, but in tax accounting it is calculated.
Temporary difference (TD)
It is determined similarly to the method given for OHA. However, this quantity has the opposite sign. Deferred tax liability is an amount that results in increased payments to the budget in future periods. These deductions will need to be paid later.
Specifics
Deferred tax liabilities are accounted for in the period in which the corresponding differences arise. To better understand the essence, you can take VAT on profits when determining the moment of the appearance of amounts subject to deduction to the budget in the upcoming cycle. As a future deduction, VAT is reflected in the account. 76. IT is recorded in the same way, only under Article 77.
Adjustments
As temporary differences decrease or completely eliminate, the deferred liability will also decrease. Information in the article's analytics will be corrected. Upon disposal of an asset or liability for which accruals were made, these amounts will not affect the amount of deductions in future periods. In such cases, IT is written off. Deferred liabilities are reflected in the profit and loss account. They are shown in the debit of the account. 99. At the same time, count. 77 is credited. In the reporting period, in the process of determining the indicator on line 2420, the repaid amount and the indicator of newly arisen IT are entered. When filling out lines 2430, 2450, you should use the “debit-credit” rule. According to the account 09 and 77 subtract the expenditure turnover from the income turnover, then determine the sign of the result obtained. In the reporting, a positive or negative (in parentheses) value is indicated in the corresponding lines. If IT changes upward, the deduction from profit will decrease. And, conversely, if it decreases, the payment will increase.
Current profit deduction
It consists of the amount actually paid to the budget within the reporting period. This value is calculated based on the amount of conditional income/expenses, as well as its adjustments to the indicators used in the formation of IT, IT and fixed payments. For calculations, therefore, use the formula:
TN = UR(UD) + PNO - PNA + SHE - IT.
The calculation model is defined in PBU 18/02, paragraph 21. You can check the correctness of the calculation using an alternative formula:
Practical use
How is deferred tax liability shown? An example can be given as follows. Let's say an organization purchased a computer program. The cost of the software is 8 thousand rubles. At the same time, the developers limited the period of use of the program. In this regard, the director of the enterprise ordered the write-off of costs for the purchase of software over two years. In the financial documentation, the amount is included in deferred costs. It is allowed to write off the cost of the program as a lump sum expense in tax accounting. As a result, a temporary difference appeared. The conditional payment from profit will be higher than the current one by the amount IT: 8000 x deduction rate. This will be reflected in the financial documentation as follows:
In this case, the item that reflects the amount of upcoming payments acts as a passive balance sheet. It accumulates tax amounts subject to additional payment in future periods. It is written off in future cycles. In the example under consideration, the computer program was removed from tax reporting. Accordingly, it does not in any way affect the costs of the enterprise. In accounting, on the contrary, write-offs apply only to a certain part of the program that falls within the current financial period. The information is displayed in the following way:
- Dt sch. 20 CD count. 97 - part of the cost of the computer program (not including VAT);
- Dt sch. 19/04 Kd sch. 97 - deduction amount
In such a situation, the amount of the current payment to the budget will be greater than the conditional one. Part of the latter must be paid extra. The postings result in a debit turnover.
The procedure for accrual and reflection of these assets and liabilities is regulated in accordance with Order "" dated November 19, 2002.
Accounting profit - loss can often differ from taxable profit. This is because rules may be applied to determine the amount of income that will take into account permanent and temporary differences. Income recognition occurs through the use of special accounting regulations approved by the legislative system of the Russian Federation on fees and taxes.
Temporary differences can have different effects on the amount of profit or loss, depending on their nature and influence they can be classified:
Temporary differences with deduction
This type of difference means the creation of deferred income tax, which will lead to a decrease in the tax base in the next or subsequent reporting periods. In other words, this leads to the formation of OTA - a deferred tax asset. To bring accounting movements into order, an account (deferred tax assets) must be used.
When created, the amount of income tax in the accounting period will approach this value only for the tax reporting period. In subsequent months, it will be possible to carry out full or partial repayment of OTA to reduce or increase conditional income and expenses.
Temporary tax differences
Taxable differences in the formation of profit and loss for the purpose of calculating income tax lead to the creation of IT (deferred tax liability). Using this method, the tax base in the reporting period is reduced, and for subsequent periods it will increase due to the transfer of payment.
To put accounting entries in order when it moves, an accounting account (deferred tax liabilities) is used.
In analytical accounting, each temporary difference must be taken into account individually depending on the group of assets or liabilities. Simply put, all deferred tax liabilities cannot be aggregated into one single netting.
What are the consequences of refusing to apply the Order?
This accounting regulation may not apply to non-profit organizations or small businesses. Many accountants confidently do not want to use this Order. They find it confusing, incomprehensible and difficult to understand. Therefore, we have to understand the possible consequences of ignoring the PBU.
In cases where a company refuses to apply PBU, it loses the opportunity to fully or partially not pay income tax in the reporting period. Most likely, in this case, the tax service will file claims against the management and accounting department of the enterprise for gross violations and incorrect accounting entries.
For the responsible person, this may result in a fine of 15 thousand rubles. Also, control authorities can apply a fine for an administrative violation in the range of 2-3 thousand rubles. All such penalties can reach 10% of the payment from the overall distorted picture in accounting.
In all other cases, when PBU is applied fully and legally, possible errors can be completely avoided in both tax and accounting. Guided by this order, most accountants do an excellent job of finding inaccuracies and errors associated with the determination of certain taxes and payments. It also helps to understand the moments and timing of recognition of income and expenses in the reporting period.
Basic transactions for 77 and 09 accounts when forming ONA and ONO
Account Dt | Kt account | Wiring description | Transaction amount | A document base |
68 | Posting for accrual of deferred tax asset | Amount that increases notional income or expense | Accounting statement, declaration, | |
68 | Full or partial write-off of ONA | Repayment amount of previously formed ONA | Bank statement, payment order | |
68 |
The rules for accounting for income and expenses of an enterprise in the process of determining the tax base for income tax and in accounting differ. A number of business transactions carried out in the reporting period lead to discrepancies between the profit calculated according to the accounting rules and the taxable profit of the enterprise. Cases when the profit in the tax return is less than the amount of accounting profit, and the resulting difference will be compensated only in subsequent periods, are called “deferred tax liabilities”.
What are deferred tax liabilities?
If all the rules for calculating the accounting profit of an enterprise and taxable profit for the same period are observed, situations arise in which profit indicators for taxation and accounting purposes will differ.
The differences that arise can be permanent or temporary. Temporary differences mean that taxable profit will be adjusted to the amounts of previously incurred differences in subsequent periods. Deferred tax liabilities are temporary positive differences that will entail an increase in income tax in subsequent periods, gradually aligning the estimated income tax values according to accounting data with the income tax payable according to tax rules.
Reasons for the occurrence of deferred tax liabilities
The reason for the occurrence of deferred tax liabilities is the accounting rules lawfully applied by the enterprise, under which the accounting profit in a particular period will differ from the taxable one and the difference will gradually be repaid in subsequent periods. Reasons for deferred income tax include:
- different methods of accounting for depreciation when calculating income tax and in accounting;
- recognition of revenue and interest income for taxation on a cash basis, and in accounting - according to the temporary certainty of facts;
- different accounting of interest on loans and borrowings;
- other similar accounting differences.
The procedure for reflecting and accounting for deferred tax liabilities
The procedure for accounting for deferred tax liabilities is set out in PBU 18/02 (Order of the Ministry of Finance of the Russian Federation dated November 19, 2002 N114n). The purpose of accounting for discrepancies between the actually paid income tax and the estimated (conditional) tax according to accounting data is to comply with the principle of completeness and continuity of accounting.
The responsibility for accounting for differences that arise is assigned to all enterprises and organizations, except those to which simplified accounting forms are applied. Deferred tax liabilities are indicated as part of debt obligations in the organization's balance sheet (line 1420), as well as in the profit and loss statement (line 2430) in the form of a positive or negative difference in turnover on the accounting accounts reflecting them.
To account for accounting purposes, the Chart of Accounts provides for a separate balance sheet account 77; in analytical accounting, liabilities are separately accounted for by the types of accounting objects in the valuation of which a taxable difference arose. Deferred tax liabilities are subject to accounting using the formula:
Temporary difference x Profit tax rate effective at the reporting date,
where the temporary difference is calculated as the difference between the organization's accounting profit and taxable profit.
Accounting entries in account 77 reflect the occurrence, movement and loss of deferred tax liabilities.
Location: MoscowSubject: “The relationship between accounting and tax accounting: application of PBU 18/02 and calculation of differences”
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Expenses or income in accounting and tax accounting may be recognized in different ways. In this case, it is necessary to take into account the differences in order to link accounting and tax profits. For this you need PBU 18/02. Only non-profit organizations and small businesses have the right not to apply it.
Permanent and temporary differences
When the procedure for recognizing income or expenses in accounting and tax accounting differs, differences arise. PBU 18/02 divides them into two types - temporary and permanent. The diagram will help you figure out what type of difference the identified difference belongs to (see below. – Editor’s note).
How to determine the type of difference according to PBU 18/02
If income or expense is recognized in only one account, a permanent difference is created. In this case, the discrepancy between accounting and tax accounting will not be eliminated even over time. For example, a permanent difference will arise if expenses are recognized in accounting, but from the point of view of tax legislation they are not expenses. These include entertainment expenses and advertising expenses in excess of the limit. In accounting, the company recognizes them in full, but for income tax purposes it will not be possible to take into account expenses in excess of the standard. Then a permanent difference will arise, which increases the amount of tax profit.
Sometimes a permanent difference is formed, which, on the contrary, reduces profit in tax accounting. True, this does not happen very often. An example is a situation where a company receives income from the transfer of property as a share in the authorized capital of another organization. This income does not need to be recognized in tax accounting (subclause 2, clause 1, Article 277 of the Tax Code of the Russian Federation), but in accounting it is the other way around.
When, due to a permanent difference, the profit in tax accounting is greater than in accounting, a permanent tax liability (PNO) is formed. And if, on the contrary, the accounting profit is greater than the tax profit, a permanent tax asset is reflected - PNA. To calculate PNO or PNA, you need to multiply the constant difference by the income tax rate.
In accounting for PNO, it is reflected by an entry in the debit of account 99 of the sub-account “Fixed tax liabilities” and in the credit of account 68 of the sub-account “Calculations for income tax”. And in order to record the asset, the accountant makes a reverse entry to the debit of account 68 and the credit of account 99 of the “Permanent tax assets” subaccount.
EXAMPLE 1
Constant differences
When calculating income tax for 2014, the accountant discovered that the amount of entertainment expenses for the year amounted to 30,000 rubles. However, since labor costs for the year are equal to 700,000 rubles, only 28,000 rubles can be recognized in tax accounting. (RUB 700,000 × 4%). In this case, a permanent difference in the amount of 2000 rubles is formed. (30,000 - 28,000) and the corresponding PNO - 400 rubles. (RUB 2,000 × 20%). After all, expenses that exceed the standard will never be recognized in tax accounting and they increase the amount of income tax. The accountant took into account entertainment expenses and accrued PNO by posting:
DEBIT 26 CREDIT 60
– 30,000 rub. – entertainment expenses are taken into account;
DEBIT 99 subaccount “Permanent tax liabilities”
CREDIT 68 subaccount “Calculations for income tax”
– 400 rub. – a permanent tax liability has been accrued.
Also in the reporting year, the company acquired a stake in the authorized capital of another organization in the amount of 10,000 rubles. As a contribution to the authorized capital, the company transferred goods with a book value of 7,000 rubles. The difference between the estimated and book value of the deposit in the amount of 3,000 rubles. (10,000 – 7,000) the accountant will include in other income. To do this, he will write:
DEBIT 76 CREDIT 91 subaccount “Other income”
– 3000 rub. – income from the transfer of goods as a contribution to the authorized capital of another organization is reflected.
However, income does not arise in tax accounting (subclause 2, clause 1, article 277 of the Tax Code of the Russian Federation). Therefore, a permanent tax asset is formed in the amount of 600 rubles. (3000 × 20%), which the accountant will reflect in accounting as follows:
DEBIT 68 subaccount “Calculations for income tax”
CREDIT 99 subaccount “Permanent tax assets”
– 600 rub. – a permanent tax asset has been accrued.
When an expense or income is recognized in tax accounting in one period, and in accounting in another, temporary differences arise. In this case, unlike permanent differences, the difference between accounting and tax accounting is eliminated over time. For example, a temporary difference may arise if a company calculates depreciation differently in accounting and tax accounting. A good example is the depreciation bonus. This opportunity exists only in tax accounting, where a company can write off part of the cost of a fixed asset immediately. But such a mechanism is not provided for in accounting. Here the value of the property will be written off in the usual manner.
Temporary differences are divided into two types - deductible and taxable. When the difference causes tax profit to be greater than accounting profit, a deductible temporary difference arises. Then the accountant will generate a deferred tax asset (DTA), the value of which is equal to the temporary difference multiplied by the tax rate.
And if the difference that arises reduces profit in tax accounting and increases it in accounting, it is taxable and forms a deferred tax liability (DTL). IT is calculated by analogy: by multiplying the taxable difference by the tax rate.
To account for IT, the accountant uses account 09 “Deferred tax assets”, and liabilities – account 77 “Deferred tax liabilities”. The accrual of the asset is reflected by posting to the debit of account 09 and the credit of account 68 of the sub-account “Income Tax Calculations”, and the liabilities - to the debit of account 68 and the credit of account 77. In future reporting periods, income and expenses in accounting and tax accounting will begin to gradually converge, and deferred assets and liabilities will be repaid by reverse entries.
EXAMPLE 2
Taxable temporary differences
In November 2014, the company purchased the car. Its initial cost is 1,080,000 rubles. (excluding VAT). The accountant assigned the vehicle to the second depreciation group and established a useful life of 36 months. The company's tax accounting policy provides for the opportunity to use bonus depreciation and write off 10 percent of the original cost of the car at a time. In accounting, the amount of monthly depreciation will be 30,000 rubles. (RUB 1,080,000: 36 months).
But the tax calculation will be different. First, the accountant will determine the amount of bonus depreciation. It will be 108,000 rubles. (RUB 1,080,000 × 10%). The accountant will include this amount in expenses in full in December - in the period when the company begins to operate the fixed asset. The cost of the car, on which depreciation will be calculated in tax accounting, is equal to 972,000 rubles. (1,080,000 – 108,000), respectively, the monthly amount of deductions will be 27,000 rubles. (RUB 972,000: 36 months). Thus, in December, the amount of depreciation expenses in tax accounting is equal to 135,000 rubles. (27,000 + 108,000). And in accounting - 30,000 rubles. A taxable temporary difference will arise in the amount of RUB 105,000. (135,000 – 30,000) and IT – 21,000 rubles. (RUB 105,000 × 20%). In December, the accountant will make the following entries:
DEBIT 26 CREDIT 02
– 30,000 rub. – depreciation accrued for December;
DEBIT 68 subaccount “Calculations for income tax” CREDIT 77
– 21,000 rub. – deferred tax liability is reflected.
And then, from January next year, depreciation expense in accounting will be greater than in tax accounting by 3,000 rubles. (30,000 – 27,000). The temporary difference will be reduced monthly by this amount. And the accountant will repay IT for 600 rubles every month. (RUB 3,000 × 20%) by posting to the debit of account 77 “Deferred tax liabilities” and the credit of account 68 subaccount “Calculations for income tax”.
EXAMPLE 3
Deductible temporary differences
The company's balance sheet includes production equipment with an initial cost of 120,000 rubles. For accounting purposes, the useful life of the equipment is 24 months. And in tax accounting, the accountant set a longer period - 40 months. The company put the equipment into operation in November 2014, and began accruing depreciation in December. Its value in accounting will be 5,000 rubles. (RUB 120,000 / 24 months). And in tax accounting, the amount of monthly depreciation is 3,000 rubles. (RUB 120,000: 40 months).
Every month the accountant will record the deductible temporary difference - 2000 rubles. (5000 – 3000) and create a deferred tax asset by writing:
DEBIT 09 CREDIT 68 subaccount “Calculations for income tax”
– 400 rub. (RUB 2,000 × 20%) – a deferred tax asset is reflected.
After 24 months, when the cost of the equipment is fully expensed for accounting purposes and still depreciable for income tax purposes, the temporary difference will begin to decrease. And the accountant will repay the deferred tax asset monthly by posting:
DEBIT 68 subaccount “Calculations for income tax” CREDIT 09
– 600 rub. (RUB 3,000 × 20%) – the deferred tax asset is repaid.
The company shows tax liabilities and assets in its reporting (see table below. – Editor’s note). Deferred tax assets and liabilities are reflected in the balance sheet (lines, ), and their changes are reflected in the income statement (lines, ). Information on permanent tax assets and liabilities is provided for reference in the income statement on line 2421.
How to report permanent and deferred tax assets and liabilities in financial statements
Type of asset or liability | How is it reflected in the reporting? |
---|---|
Deferred tax asset | In the balance sheet, line 1180 reflects the balance of account 09. And in the financial results statement on line 2450, the difference between the debit and credit turnover of the account is recorded. If it is positive, the amount is indicated with a “+” sign. And when it is negative – with a “–” sign |
Deferred tax liability | Line 1420 of the balance sheet shows the account balance 77. And on line 2430 of the financial results report - the difference between the turnover on the credit and debit of account 77. A positive amount is reflected with a “–” sign, a negative amount with a “+” sign. |
Permanent tax asset, permanent tax liability | The difference between PNO and PNA is recorded on line 2421 of the financial results statement. If the difference is negative, it must be indicated with a “–” sign. |
ABOUT THE LECTURER
Sergey Aleksandrovich Tarakanov – 2nd class adviser to the state civil service of the Russian Federation. Graduated from the Modern Humanitarian University (Institute) in 1998. Bachelor of Law. Until 2003, he worked in various commercial organizations as a lawyer. From 2003 to the present, he has been working in the Federal Tax Service of Russia (formerly the Ministry of Taxes of Russia), first as a consultant in the Department of Largest Taxpayers, now as a head of department in the Control Department.Conditional income or expense and current income tax
Permanent and temporary differences are needed in order to link profits in accounting and tax accounting. For this purpose, PBU 18/02 introduces additional concepts - “conditional income tax expense (income)” and “current income tax”.
To calculate the conditional expense, you need to multiply the profit according to accounting data by the tax rate. And if the company received a loss in the reporting period, then the profit tax on its amount forms conditional income. To account for conditional expenses or income, account 99 is used. The first is reflected by an entry in the debit of account 99 subaccount “Conditional income tax expense” and in the credit of account 68 subaccount “Calculations for income tax.” And conditional income is accrued by posting to the debit of account 68 subaccount “Calculations for income tax” and the credit of account 99 subaccount “Conditional income for income tax”.
Current income tax is the result of multiplying profit in tax accounting by the tax rate. This indicator is calculated using the formula (clause 21 of PBU 18/02):
TNP = +(–) U – PNA + PNA +(–) ONA +(–) ONO,
where TNP is the current income tax;
U is a conditional income tax expense or income.
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