How does the IAS 12 deferred tax assets report work

Introduction

As part of the IFRS standard IAS 12 concern corporate income tax. Certain tax jurisdictions permit a tax deduction for equity compensation covered by IAS 12 §68 A-C. The DTA for equity compensation is an accruing asset reflecting the estimated future tax deduction that companies can anticipate, and accrue in line with the vesting period as the employee fulfill their service period. 

How can I get access to the Optio DTA report?

The Optio DTA report is one of the reports in our report suite, which is typically not included in our standard financial reports. Our reporting suite is designed with flexibility in mind, allowing you to add this report at any time to meet your specific reporting needs.

If you're interested in enhancing your financial reporting with the Optio DTA Report, or if you have any questions about our modular reporting options, please don't hesitate to reach out. Contact your Optio contact person or email us at support@optioincentives.no for more information.

How can I generate the DTA report? 

When you create a new report (see How to create a new financial report), the DTA report will be part of the complete report output if it is included in your report configuration(s).

Note that in case you have several report configurations available, the DTA report may not be included in all of them. Hence, you can try to use a different report config if it is not included in your default report config. If you would like to adjust any of your existing report configs you can reach out to your Optio contact.

What does the DTA report look like?

When you run a report, the first page you are redirected to is a web-version of the report. In the web version of the report you have access to the complete report. You can also download the full report to Excel, and the Excel download will contain all the information you have access to in the web-version of the report. 

To download the report to Excel, you can at any view of the report click on the Download report button. 

Share price

At the top of the report you will find information about the share prices relevant to the reporting period. The deferred tax assets calculations are based on the share price at the opening balance date and closing balance dates, and the Share Price OB and Share Price CB within this first reporting section display the share prices applicable at these dates. 

In the Excel report, the Share price OB and Share price CB is included as part of the share price table at the top of the Overview tab.

Overview tables

On the overview tab of the report there will be a separate table for the deferred tax assets report. This overview table contains a high-level view of the key figures relevant to deferred tax assets. 

Note that the web version of this report is a bit different than the others, as there are different tabs for the asset figure, one for the portion to be booked against the profit and loss, and one for the portion to be booked against equity. 

The Deferred Tax Assets overview tables contain the following columns:

DTA

1. Opening Balance: The DTA that should have been recognized as of the first date of the reporting period
2. Period: The DTA movement to be recognized for the period
3. Closing Balance: The DTA that should be recognized by the last date of the reporting period

DTA P/L

1. Opening Balance: The profit and loss portion of DTA that should have been recognized as of the first date of the reporting period
2. Period: The profit and loss portion of  DTA movement to be recognized for the period
3. Closing Balance: The profit and loss portion of  DTA that should be recognized by the last date of the reporting period

DTA Equity

1. Opening Balance: The equity portion DTA that should have been recognized as of the first date of the reporting period
2. Period: The equity portion DTA movement to be recognized for the period
3. Closing Balance: The equity portion DTA that should be recognized by the last date of the reporting period

Just like all our overview tables you can select to view the overview table with different groupings to see the DTA figures according to your liking. If you prefer a different grouping than available, please reach out to your Optio contact and they can configure these tables for you.

In the Excel download you can see the same tables, where each table grouping is included as separate tables stacked on top of each other. There will be a separate table for DTA, DTA P&L, and DTA Equtiy, stacked next to each other. 

Detailed DTA figures

To get a complete understanding of theDTA figures in the overview, you can view the detailed DTA figures with a complete audit-trail by clicking on the DTA tab. 

In the Excel report the DTA details can be accessed by clicking on the DTA tab in the Excel.

The DTA detailed report has a similar structure to the other report, where each row in the table represent one TRANCHE, which reflects a single vesting of an award for a person, program and sub program basis. On each row you will find information about the specific TRANCHE the row relates to, the relevant input figures used for the DTA calculations, columns with calculations steps, and the DTA figures. The report contains all information required in order to calculate the DTA figures.

Deferred tax assets columns

To better understand the DTA detailed report, an explanation of a selection of the columns can be found below:

• Strike OB/CB: These are the updated strike prices of the award as of OB- and CB-dates. These will be used to calculate the intrinsic value together with the OB and CB share price, which is the basis value of the deferred tax assets calculations. 
  
• Quantity OB/CB: These are the outstanding quantity at the OB- and CB-date of the report. In cases where an employee move from one entity to another within the period, another row for the same award will be displayed in the report and the quantity will be reversed out from the old entity and fully move into the new one. 
  
• Perf. Adj. Estimate OB/CB: These are the latest performance estimates as of OB- and CB-date applicable to the DTA calculations. If there are any updates to the expected achievement of a performance condition within a period the estimate as of OB and CB is displayed in these columns. Any impact on DTA caused by a change in performance estimates in the period will automatically be trued up within the period.
  
• Perf. Adj. Quantity OB/CB: These reflect the quantity adjusted of the performance estimates as of the OB- and CB-date of the report. 
  

• Tax rate OB/CB: These are the applicable corporate income tax rate for the tax jurisdiction of the entity. In the case of an employee moving from an entity of one tax jurisdiction to another, the applicable tax rate per entity will be visible on the separate row for each entity. In the case where a tax rate change for an entity within the period, the change can be observed from the OB- to CB-version of the columns, and the resulting impact on the DTA will be trued up in the period.
  
• Share Price OB/CB: This is the share price at the opening- and closing balance date of the share the instrument will be settled in.
  
• Value OB/CB: This is the intrinsic value of the instrument, which is the value basis used for DTA calculations. The value is calculated by deducting the Strike OB/CB from the Share Price OB/CB. 
  

• Earned OB / Period / CB: The Earned reflect the percent of the employees service period that has been completed at the OB- and CB date. This is typically the percent of time passed at OB- and CB date between the Grant date and Vesting date, but the service period can deviate from these if required. 
  

• DTA Basis OB / CB: This reflects the earned total gain for the employee measured using intrinsic value for the tranche, which is used as the basis for the DTA calculation. In the case of mobility the full DTA Basis will reverse out of the entity the employee is moving out from, and the new entity will recognize the full DTA Basis as of the CB date.
  

• IFRS Cost OB / CB: These figures reflect the IFRS 2 cost that should be recognized as of the OB and date, and are used to identify the portion of DTA to be booked against P&L and equity. 
   
• DTA OB / Period / CB: These figures reflect the deferred tax assets that should've been recognized as of the OB date, the additional movement to recognize for the period, and the asset that should be accumulated as of the CB date of the period. In the case of mobility the full DTA will reverse out of the entity the employee is moving out from, and the new entity will recognize the full DTA as of the CB date.
  

• DTA P/L OB / Period / CB: These figures reflect the profit and loss portion of the deferred tax assets that should be recognized as of the OB date, the additional movement to recognize for the period, and the profit and loss effect that should be accumulated as of the CB date of the period. In the case of mobility the full DTA P/L will reverse out of the entity the employee is moving out from, and the new entity will recognize the full DTA P/L as of the CB date. These figures are calculated by taking the lowest number between the DTA Basis and IFRS Cost, multiplied with the tax rate, as that is the maximum value allowed to be booked in the profit and loss. 
  

• DTA Equity OB / Period / CB: These figures reflect the equity portion of the deferred tax assets that should be recognized as of the OB date, the additional movement to recognize for the period, and the equity portion that should be recognized as of the CB date of the period. In the case of mobility the full DTA Equity will reverse out of the entity the employee is moving out from, and the new entity will recognize the full Equity as of the CB date. The portion of DTA to be booked in equity is the portion of DTA that potentially exceed the portion allowed to be booked in the profit and loss. Said differently, the taxed portion of DTA Basis that exceed the IFRS cost should be recognized in equity. This also means that in any case that the intrinsic value is smaller than the IFRS 2 FV the portion to allocate to equity is zero, while if the intrinsic value is larger than the IFRS 2 FV then the portion exceeding the FV will be used to arrive at the DTA equity.