Understanding current tax automation

You can set your Tax Provision system to automatically transfer data to current tax for book-tax difference accounts. Current Tax automation calculates values in the current provision (current tax charge) for permanent and temporary difference accounts, and in the gross temporary difference rollforward for temporary difference accounts. Amounts automated into the current year column for temporary differences provides for an offset between the current provision (current tax charge) and deferred provision with no impact to the ETR.

The Current Tax automation calculation is the result of the following related settings:

This section explains how the combination of these settings plus other factors affects Current Tax automation and includes various possible scenarios.

Making manual adjustments and viewing current tax automation amounts

You can automate the current tax amounts into the current year column for temporary differences to provide an offset between the current provision (current tax charge) and the deferred provision. You can view automated amounts and make manual adjustments to the current provision (current tax charge) in the following input apps, depending on the type of account:

For Income accounts in ASC systems:

• NA0201 - Current Provision
• RA0201 - Current Provision

For Income accounts in IAS systems:

• NA1201 - Current Tax Charge
• RA1201 - Current Tax Charge

For Equity and OCI accounts in ASC systems:

• NA0201 - Current Provision
• RA0201 - Current Provision

For Equity and OCI accounts in IAS systems:

• NA1201 - Current Tax Charge
• RA1201 - Current Tax Charge

You can view the automated and manual amounts for the current provision (current tax charge) in the following reports:

For Income accounts in ASC systems:

• NA0201 - Current Provision
• RA0201 - Current Provision

For Income accounts in IAS systems:

• NA1201 - Current Tax Charge
• RA1201 - Current Tax Charge

For Equity and OCI accounts in ASC systems:

• NA0202 - Current Provision - Equity
• RA0202 - Current Provision - Equity

For Equity and OCI accounts in IAS systems:

• NA1201 - Current Tax Charge - Equity
• RA1201 - Current Tax Charge - Equity 

Understanding current tax automation system settings

You can automatically calculate the current tax amount for entities by account using the following system settings:

• Current Tax Automation - Allow Automation of Current Tax system setting
• Current Tax Automation - Display Automation Settings system setting
• Entity Default Setting for Automation of Current Tax symbol default system setting

Current Tax Automation - Allow Automation of Current Tax system setting

The Current Tax Automation - Allow Automation of Current Tax system setting must set to TRUE to enable the automation of current tax.

Current Tax automation calculates values in the current provision (current tax charge) for permanent and temporary difference accounts, and in the gross temporary difference rollforward for temporary difference accounts. Amounts automated into the current year column for temporary differences provides for an offset between the current provision (current tax charge) and deferred provision with no impact to the ETR.

You can set the Current Tax Automation - Allow Automation of Current Tax system setting using the System Settings editor or the System_Settings.csv import file.

For more information on the System Settings editor, see “Configuring system settings” in the Longview Tax Administrator’s Guide. For more information on the System Settings import file, see “Preparing an import file for system settings” in the Tax Provision Implementer’s Guide.

Current Tax Automation - Display Automation Settings system setting

This setting is available in the System Settings editor only if the Current Tax Automation - Allow Automation of Current Tax system setting is set to FALSE.

The Current Tax Automation - Display Automation Settings system setting activates the settings related to current tax so you can set these options without transferring data to current tax. If the Current Tax Automation - Display Automation Settings setting is set to FALSE, the settings related to current tax are not available. You can set the Current Tax Automation - Display Automation Settings setting using the System Settings editor or the System_Settings.csv import file.

For more information on the System Settings editor, see “Configuring Current Tax automation settings” in the Longview Tax Administrator’s Guide. For more information on the System Settings import file, see “Preparing an import file for system settings” in the Tax Provision Implementer’s Guide.

Entity Default Setting for Automation of Current Tax symbol default system setting

This setting specifies whether the Automate Current Tax Amounts setting is selected or cleared by default in the Entities editor. If the Entity Default Setting for Automation of Current Tax is set to TRUE, the Automate Current Tax Amounts setting is selected by default in the Entities editor when a new entity is created. If the Entity Default Setting for Automation of Current Tax setting is set to FALSE, the Automate Current Tax Amounts setting is cleared by default in the Entities editor when a new entity is created. You can set the Entity Default Setting for Automation of Current Tax symbol default setting using the System Settings editor or the System_Settings.csv import file.

For more information on the System Settings editor, see “Configuring system settings” in the Longview Tax Administrator’s Guide. For more information on the System Settings import file, see “Preparing an import file for system settings” in the Tax Provision Implementer’s Guide.

Understanding current tax automation entity settings

You can automatically calculate the current tax amount for entities by account using the following entity setting:

Automate Current Tax Amounts legal entity setting

This setting is available in the Entities editor only if the Current Tax Automation - Allow Automation of Current Tax system setting is set to TRUE.

The Automate Current Tax Amounts entity setting must be set to TRUE to automatically transfer data to current tax. You can set the Automate Current Tax Amounts entity setting using either the Total Entities page of the Entities editor or the Entity_Parameters.csv import file.

For more information on the Entities editor, see “Maintaining entities” in the Longview Tax Administrator’s Guide. For more information on the Entity Parameters import file, see “Preparing import files for entity settings” in the Tax Provision Implementer’s Guide.

Understanding current tax automation account settings

You can automatically calculate the current tax amount for entities by account using the following account settings:

• Automate Current Tax Amounts account setting
• The Target Elements account setting
• Override Default Settings account setting by entity

Automate Current Tax Amounts account setting

This setting is available in the Book-Tax Differences editor only if the Current Tax Automation - Allow Automation of Current Tax system settings is set to TRUE.

The Automate Current Tax Amounts account setting must be set to TRUE to automatically transfer data for an account. Once the Automate Current Tax Amounts account setting is set to TRUE, you must define the source area of the automation using other enabled settings. The current tax element is automated as the source area multiplied by a percentage, both of which are defined using the current tax automation settings. If the Automate Current Tax Amounts account setting is set to FALSE, the current tax element is not calculated for the account. You can set the Automate Current Tax Amounts account setting using either the Book-Tax Differences editor or the BookTaxDifferences_Parameters.csv import file.

For more information on the Book-Tax Differences editor, see “Working with book-tax difference accounts” in the Longview Tax Administrator’s Guide. For more information on the Book Tax Differences import file, see “Preparing import files for book-tax difference settings” in the Tax Provision Implementer’s Guide.

Target Elements account setting

This setting is available in the Book-Tax Differences editor only if the Use Income/Equity/OCI Settings system setting is TRUE and the Automate Current Tax Amounts account setting is set to TRUE. If the Use Income/Equity/OCI Settings system setting is FALSE, all new accounts are classified as Income accounts.

The Target Elements account setting lets you specify the target elements for the difference account. The target element determines the column(s) in the current provision (current tax charge) reports that are calculated by the Current Tax automation. For information on the target element symbols that are calculated for each target element selection, see Reviewing current tax automation setting combinations. Depending on the selection for the Income/Equity/OCI setting for each difference account, valid target elements vary:

• If Income/Equity/OCI is set to Income, the valid value is Income.
• If Income/Equity/OCI is set to Equity for permanent difference accounts, the valid values are Equity or Equity and Income. For temporary difference account you must set the Target Elements account setting to Equity.
• If Income/Equity/OCI is set to OCI for permanent difference accounts, the valid values are OCI or OCI and Income. For temporary difference accounts you must set the Target Elements setting to OCI.

You can set the Target Elements setting using either the Book-Tax Differences editor or the BookTaxDifferences_Parameters.csv import file.

For more information on the Book-Tax Differences editor, see “Working with book-tax difference accounts” in the Longview Tax Administrator’s Guide. For more information on the Book Tax Differences import file, see “Preparing import files for book-tax difference settings” in the Tax Provision Implementer’s Guide.

Override Default Settings account setting by entity

The Override Default Settings account setting is available only for entities other than Dim2Set - Entities Default.

The Override Default Settings account setting by entity must be set to TRUE to enable the AutomateCurrent Tax Amounts settings for an account. Once the Override Default Settings account setting is set to TRUE, the system ignores the default setting for the account and uses the specified settings. If the Override Default Settings account setting is set to FALSE, the system uses the default settings for the account. You can set the Override Default Settings account setting by entity using either the Book-Tax Differences editor or the BookTaxDifferences_Parameters.csv import file.

For more information on the Book-Tax Differences editor, see “Working with book-tax difference accounts” in the Longview Tax Administrator’s Guide. For more information on the Book-Tax Differences import file, see “Preparing import files for book-tax difference settings” in the Tax Provision Implementer’s Guide.

Reviewing current tax automation setting combinations

Whether the current tax amount is automated or not automated and the element(s) to which the automated amount is submitted for an account and entity depends on the combination of settings for both the account and entity. Current Tax automation is calculated based on the following factors:

• Current Tax Automation - Allow Automation of Current Tax system setting
• Automate Current Tax Amounts legal entity setting
• Automate Current Tax Amounts account setting
• Target Elements account setting
• Override Default Settings account setting by entity
• The account classification (Income/Equity/OCI)

Reviewing current tax automation sample scenarios

Consider the following possible scenarios and results when the Current Tax Automation - Allow Automation of Current Tax system setting is TRUE:

Note: If the Override Default Settings account setting is set to TRUE, the Automate Current Tax Amounts setting at the entity level overrides the global settings.

The entities and accounts described are represented in the following table:

Note: The Current Tax Automation - Allow Automation of Current Tax system setting is TRUE.