Deferred tax seeks to deal with this mismatch. It is based on the temporary differences between the
tax base of an asset or liability and its carrying amount in the fnancial statements. For example, if an
investment property is revalued upwards but not sold, the revaluation creates a temporary difference (the
carrying amount of the asset in the fnancial statements is greater than the tax base of the asset) and the
tax consequence is a deferred tax liability.