Canada tax: Canada Revenue Agency (CRA) issues guidance on adoption of IFRS
The Canada Revenue Agency (CRA) issued guidance on 31 May 2022 on the effect of the adoption of International Financial Reporting Standards (IFRS) on tax reporting. Publicly accountable entities in Canada are required to adopt IFRS for fiscal years beginning on or after 1 January 2022 and certain private companies may elect to do so.
Canada Revenue Agency (CRA) states in the guidance that, where IFRS financial statements are used by a particular entity, references to generally accepted accounting principles (GAAP) in the Income Tax Act can be read as references to IFRS, and references to GAAP in any CRA publication can also be read as references to IFRS. Canada Revenue Agency (CRA) also stated that it will accept early adoption of IFRS by both publicly accountable and private entities for years commencing on or after 1 January 2009.
Canada Revenue Agency (CRA) does not expect that taxable income will differ significantly under IFRS because, where there are differences, tax rules take precedence over accounting treatment; however, the computation of taxable income could be more complex for entities that adopt IFRS.
Canada Revenue Agency (CRA) intends to develop consequential revisions to the general index of financial information forms.