Document ID: chunk:federal_register_of_legislation:F2023C00930:reg:5:p31
Version: federal_register_of_legislation:F2023C00930
Segment Type: reg
Provision Reference: reg 5 (pt 31/61)
Character Range: 97786–106010

for tax purposes.
The following is an example of a reconciliation to the domestic tax rate.
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        19X1      19X2
Accounting profit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       2,500     3,000
Tax at the domestic rate of 30%                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         750       900
Tax effect of expenses that are not deductible for tax purposes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         60        30
Effect of lower tax rates in country B                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  (50)      (150)
Tax expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             760       780

The following is an example of a reconciliation prepared by aggregating separate reconciliations for each national jurisdiction. Under this method, the effect of differences between the reporting entity's own domestic tax rate and the domestic tax rate in other jurisdictions does not appear as a separate item in the reconciliation. An entity may need to discuss the effect of significant changes in either tax rates, or the mix of profits earned in different jurisdictions, in order to explain changes in the applicable tax rate(s), as required by paragraph 81(d).
Accounting profit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       2,500     3,000
Tax at the domestic rates applicable to profits in the country concerned                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                700       750
Tax effect of expenses that are not deductible for tax purposes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         60        30
Tax expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             760       780

86 The average effective tax rate is the tax expense (income) divided by the accounting profit.
87 It would often be impracticable to compute the amount of unrecognised deferred tax liabilities arising from investments in subsidiaries, branches and associates and interests in joint arrangements (see paragraph 39). Therefore, this Standard requires an entity to disclose the aggregate amount of the underlying temporary differences but does not require disclosure of the deferred tax liabilities. Nevertheless, where practicable, entities are encouraged to disclose the amounts of the unrecognised deferred tax liabilities because financial statement users may find such information useful.
87A Paragraph 82A requires an entity to disclose the nature of the potential income tax consequences that would result from the payment of dividends to its shareholders. An entity discloses the important features of the income tax systems and the factors that will affect the amount of the potential income tax consequences of dividends.
87B It would sometimes not be practicable to compute the total amount of the potential income tax consequences that would result from the payment of dividends to shareholders. This may be the case, for example, where an entity has a large number of foreign subsidiaries. However, even in such circumstances, some portions of the total amount may be easily determinable. For example, in a consolidated group, a parent and some of its subsidiaries may have paid income taxes at a higher rate on undistributed profits and be aware of the amount that would be refunded on the payment of future dividends to shareholders from consolidated retained earnings. In this case, that refundable amount is disclosed. If