The new Canadian accounting rule for income taxes is effective for fiscal years commencing in 2000.
Major changes are mandatory.
Like US and international standards, the new rule will present a more accurate balance-sheet picture of a corporation's tax assets and liabilities. The 40-page standard for the recognition, measurement, presentation, and disclosure of income and refundable taxes in an enterprise's financial statements may result in a materially different reported financial position compared with previous years. For example, an investment corporation that holds real estate must include its adjusted cost base for tax purposes, which may differ materially from the financial statements' carrying value. The financials of a construction company must include information concerning the income tax bases of holdbacks, work in progress, payables, and tax reserves. Because taxes typically affect value, this new accounting standard may also have other implications for the assessing of share value.