Classifying tax credits
A qualified refundable tax credit must be payable in cash or equivalents within four years of meeting the statutory conditions. Its GloBE treatment is income rather than a tax reduction, requiring adjustments where the accounts classify it as negative tax expense. Marketable transferable credits require both legal transferability and marketability tests, including the specified 80% net-present-value pricing conditions. Originator and purchaser treatment differs. Check each credit’s legal and accounting facts rather than classifying all incentives as refundable income.
Following later events
The slides also address post-filing changes, tax-rate changes, unpaid current taxes, GloBE-loss elections and deemed-distribution tax elections. The distribution election uses a recapture account and can require original-year recalculation if amounts remain after the stated period or an entity leaves or transfers its assets. Maintain separate schedules for the credit, accounting adjustment and later utilisation or recapture. A favourable credit classification does not remove the associated income adjustment or future tracking obligation.
Official source
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