ACCA SBR 2026: The Deferred Tax Impairment Trap That Scores Zero

Deferred tax isn't about "is it tax deductible now"

The single question that unlocks almost every SBR deferred tax mark: does the carrying amount differ from the tax base? If it does, you have a temporary difference and a deferred tax balance — full stop. Candidates who ask "is this expense allowable for tax?" instead walk straight past easy marks.

What the examiner keeps flagging

The SBR examining team's reports say the same thing sitting after sitting: candidates understand the principle but can't apply it to the scenario. They state the IAS 12 definition, then fail to actually compute the difference or explain why it arises. In SBR, stating "deferred tax arises on temporary differences" earns almost nothing. Working the numbers and justifying the treatment earns the marks.

Impairment is the classic trap. When you impair an asset, its carrying amount falls but the tax base usually doesn't — tax relief often only comes when the asset is sold. Many candidates conclude "impairment isn't deductible, so there's no tax effect." That's the wrong answer. The carrying amount is now below the tax base, which creates a deductible temporary difference and a deferred tax asset — recognised only to the extent future taxable profits are probable (IAS 12).

The second recurring error is placement. Deferred tax follows the item it relates to. Tax on an item in profit or loss goes to P&L; tax on a revaluation or a defined benefit remeasurement goes to OCI. Candidates routinely dump everything through P&L and lose the presentation marks.

Worked example: the impairment that most candidates zero

An asset has a carrying amount of $2,000k. It's impaired to $1,500k. The tax base stays at $2,000k because no tax relief is given until disposal. Tax rate is 20%.

Wrong answer: "The impairment loss is not tax deductible, so there is no deferred tax impact." Zero marks.

Correct answer: Carrying amount $1,500k is below the tax base of $2,000k — a deductible temporary difference of $500k. Deferred tax asset = $500k × 20% = $100k. Recognise it only if future taxable profits are probable. Because the impairment went through P&L, the deferred tax credit goes through P&L too. That's four or five marks the "not deductible" candidate threw away.

What to do in the exam

1. Build a mini table every time. Carrying amount, tax base, difference, × tax rate. Never ask "is it deductible now" — ask whether the two bases will ever differ.

2. State asset or liability, and why. Carrying amount above tax base = liability; below = asset. Then add the IAS 12 recognition test: a deferred tax asset needs probable future taxable profits.

3. Match the tax to its home. Say explicitly whether the deferred tax hits P&L or OCI, mirroring where the underlying gain or expense sits. One sentence, easy marks.

The bottom line

SBR pass rates hover around the 50% mark, and the examiner names Question 3 as the worst-performing question on the paper — precisely because it rewards application over recall. Deferred tax is where that gap shows up most. Learn to compare carrying amount with tax base on autopilot, and you turn the topic everyone fears into the marks everyone else is leaving behind.