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      Question

      An entity recognizes a remeasurement gain from a defined

      benefit plan directly in OCI in the current year. Tax law in the jurisdiction allows a tax deduction for contributions only when actually paid, and there is no current tax impact this year. How should deferred tax be recognised for the OCI remeasurement gain?
      A No deferred tax—no taxable temporary difference arises until contribution is paid. Correct Answer Incorrect Answer
      B Recognise deferred tax liability across P&L because it relates to a past event. Correct Answer Incorrect Answer
      C Recognise a deferred tax liability in OCI, consistent with the tax effect of items recognised in OCI. Correct Answer Incorrect Answer
      D Recognise deferred tax asset in OCI because future deductions will reverse. Correct Answer Incorrect Answer
      E Defer recognition until there is a taxable profit to utilise the deduction. Correct Answer Incorrect Answer

      Solution

      Ind AS 12 requires deferred tax effects of items recognised in OCI to be recognised in OCI when the tax arises from the same transaction/item. Even if deduction timing differs, the tax effect of the OCI item should be presented in OCI (unless specific exceptions apply).

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