An entity must recognize a liability on its balance sheet for current tax expense for the current and prior periods to the extent that they are unpaid.

An asset is recognized and recorded should the current tax be overpaid.

Taxes payable is based on taxable income and would rarely match the anticipated tax expense based on pre-tax accounting income. The lack of reconciliation might occur because IFRS recognition criteria for items of income and expense are different from the treatment of items under tax law.

Deferred taxes reconcile the difference. It is based on the temporary differences between the tax base of an asset or liability and its carrying amount in the financial statements. Deferred taxes are provided in full for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements unless the temporary differences result any of these:

Current and deferred taxes are recognized in the income statement unless the taxes arise from a business combination or a transaction or event that is recognized directly in equity. The resultant tax consequences of a change in tax rates or tax laws, a reassessment of the recoverability of deferred tax assets or a change in the expected manner of recovery of an asset, are recognized in the income statement, except to the extent that they relate to items previously charged or credited to equity.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date. Discounting of deferred tax assets and liabilities is not permitted. The measurement of deferred tax liabilities and deferred tax assets reflects the tax consequences that would follow from the manner in which the entity expects, at the balance sheet date, to recover or settle the carrying amount of its assets and liabilities. The expected manner of recovery for land with an unlimited life is always through sale. For other assets, the manner in which management expect to recover the asset (that is, through use or through sale or through a combination of both) should be considered at each balance sheet date.

Management only recognizes a deferred tax asset for deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilized. This applies to deferred tax assets for unused tax losses carry-forwards.