Taxes Consolidation Act 1997 section 111U

Adjusted covered taxes

Section 111U sets out how the adjusted covered taxes of a constituent entity are calculated for a fiscal year, by modifying the current tax expense reported in the entity's financial accounts to reflect additions, reductions, and deferred tax adjustments.

• The current tax expense is adjusted by adding or subtracting specified items, including deferred tax adjustments and taxes recorded in equity or other comprehensive income that relate to amounts subject to local tax rules.
• Certain amounts are added back to covered taxes, such as taxes accrued in profit before taxation, qualifying loss deferred tax assets used, uncertain tax position amounts now paid, and credits from qualified refundable or marketable transferable tax credits.
• Certain amounts are excluded from covered taxes, including taxes on income outside qualifying income or loss, non-qualified refundable tax credits not recorded in the accounts, uncertain tax position amounts, taxes not expected to be paid within three years, and amounts relating to non-marketable transferable tax credits.
• Where adjusted covered taxes in a jurisdiction are negative and fall below the expected level (net qualifying loss multiplied by the minimum tax rate), the shortfall is treated as additional top-up tax, with an option to carry forward excess negative tax expense for use in future years.

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