Deferred tax意思

"Deferred tax" is a term used in accounting and finance, particularly in the context of income taxes. It refers to the difference between the taxable profit of a company and the profit as per the financial statements, which arises due to differences in the treatment of certain items for tax and accounting purposes.

These differences can arise because of timing differences or permanent differences. Timing differences occur when an item is recognized for tax purposes in a different period than it is recognized for accounting purposes. Permanent differences occur when certain items are never recognized for tax purposes, even though they are included in accounting profit.

The deferred tax concept recognizes that these differences will eventually even out over time, and the tax will be paid or refunded in the future. Therefore, a company records a deferred tax asset or liability on its balance sheet to reflect the future tax consequences of these timing and permanent differences.

A deferred tax asset is recorded when the future taxable profit is expected to be less than the future accounting profit, and a deferred tax liability is recorded when the future taxable profit is expected to be greater than the future accounting profit.

Deferred tax is an important concept in financial reporting because it provides a more accurate picture of a company's financial position and performance by recognizing the future tax consequences of temporary differences between accounting and taxable income.