Revenue eBrief No. 006/20
Provisions and Accruals
Tax and Duty Manual Part 04-05-06 – Taxation of Provisions and Accruals (income tax and corporation tax) – has been updated to reflect the changes in Finance Act 2019 relating to the tax treatment of IFRS 9 impairment allowances.
A provision is a liability of uncertain timing or amount while an accrual is a liability to pay for goods or services which have been received without formal confirmation of the amount payable.
For tax purposes, provisions and accruals are regarded as substantially the same and are treated identically (albeit greater measurement uncertainty will usually be the distinguishing feature of a provision).
The relevant Irish statute law concerning provisions and accruals is as follows:
- Section 76A(1) of the Taxes Consolidation Act, 1997 (TCA 1997) Computation of profits or gains of a company – accounting standards; and
- Section 81 TCA 1997 General rule as to deductions.