Deferred tax meaning and presentation

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Deferred tax refers to the future tax consequences of temporary differences between accounting profit and taxable profit.

Deferred tax is a balance sheet item that represents the future tax consequences of transactions that have already been recognized in the financial statements.
It arises due to temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and their tax bases.
Deferred tax assets are recognized when taxes paid in advance exceed taxes owed, while deferred tax liabilities are recognized when taxes owed exceed taxes paid in advance.
Deferred tax is presented on the balance sheet as a non-current asset or liability, depending on whether it is a deferred tax asset or liability.
It is important for companies to accurately account for deferred tax to ensure compliance with tax regulations and to provide a true and fair view of their financial position.

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