Q8: Explain what the item ‘Deferred tax liabilities’ means to you.

A:

What Deferred tax liabilities mean to me are that they are the amount a firm owes the government in corporate income tax in future periods as the result of its activities or events in the current (and previous) periods.

The Income tax expenses in a firm’s accounts is based on the effect of the firm’s activities during the year on its corporate income tax obligations to the government, regardless of when the income tax might become due and payable to the government.

Deferred tax liabilities are the amount of timing differences between the tax expenses calculated in a firm’s accounts (using tax effect accounting: AASB 112 Income Taxes) and the actual corporate income tax the company needs to pay that year (the firm’s assessable tax for the year calculated under taxation law by taxing authorities).