What is deferred tax?
submitted by mohana rao malla

John Conner, CPA

This can also be called a future income tax. This is broken down into two categories: 1) Temporary Difference, and 2) Timing Difference.

When there's a temporary difference between the tax base and the carrying amount of an asset/liability, there would be a deferred tax to come at some future date.

A timing difference happens when income or expense is accounted for on the company's ledger, but not for tax purposes. It could also be that the company has recognized an income or expense for tax purposes, but not for accounting purposes. That would also result in a deferred tax.