Tax claims on different issues

Hi,

Amongst the following,

Government grants,

Subsidy,

Capital allowances,

50 percent discount sale,

Which of them will give rise to temporary difference in deferred tax? Is a government grant given like a claim or cash only? 

 

 

 

 

 

Replies (4)
Quick Summary
This discussion examines which financial elements, such as government grants, subsidies, and capital allowances, lead to temporary differences in deferred tax. It clarifies that while capital allowances and subsidies can create these differences, the treatment of government grants is more nuanced. Grants can be received as cash or in kind and may reduce an asset's carrying amount, potentially impacting deferred tax calculations depending on how they are recognised.

Subsidy, Capital allowances can rise to temporary difference.

Government grant can be both paid in cash or in kind

That is comforting and I knew about capital allowances but not grants. So grants cannot give rise to temporary difference liability because a grant will reduce the carrying amount in two methods and assets tax base always be higher. Correct?

Grant can be recognised by deducting from cost of the asset or by deferred the grant by life of the assets in profit and loss account as same as depreciation is calculated on life of the assets

So does it give rise to deferred taxes?

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