Following submissions to the IFRS Interpretations Committee, the IASB decided that additional guidance was required as it had identified some diversity in practice. The exposure draft (ED) contains some clarifying paragraphs and an example.

The amendments cover a number of issues. The guidance makes clear that unrealised losses on debt instruments measured at fair value and measured at cost for tax purposes give rise to a deductible temporary difference regardless of whether the debt instrument's holder expects to recover the carrying amount of the debt instrument by sale or by use.

Other clarification points include:

• the carrying amount of an asset does not limit the estimation of probable future taxable profits;
• estimates for future taxable profits exclude tax deductions resulting from the reversal of deductible temporary differences; and
• an entity assesses a deferred tax asset in combination with other deferred tax assets. Where tax law restricts the utilisation of tax losses, an entity would assess a deferred tax asset in combination with other deferred tax assets of the same type.

The ED proposes limited retrospective application of the amendments for entities already applying IFRS. However, full retrospective application is proposed for first-time adopters of IFRS.

The effective date for changes will be announced once IASB has received any comments on the proposals.

The deadline for comments is 18 December 2014.

The ED Recognition of Deferred Tax Assets for Unrealised Losses (Proposed amendments to IAS 12) is available here: http://www.ifrs.org/Current-Projects/IASB-Projects/Recognition-of-Deferred-Tax-Assets-for-Unrealised-Losses/ED-August-2014/Pages/Exposure-Draft-comment-letters.aspx