Taxes Receivable
Amounts Owed to the Company from Taxing Authorities
Taxes Receivable represents refundable tax amounts or overpayments that the company expects to recover from government taxing authorities. These arise when tax payments (estimated payments, withholdings, or credits) exceed the actual tax liability for a period, or when tax credits/refunds are claimed. It is a current asset reflecting a claim against the government for excess taxes paid or eligible refunds.
What Taxes Receivable Includes
Taxes Receivable covers claims against tax authorities for:
- Income tax overpayments (estimated payments > final liability)
- Refundable tax credits (R&D, green energy, foreign tax credits)
- Value-Added Tax (VAT) or Goods & Services Tax (GST) input credits exceeding output tax
- Withholding tax overpayments
- Property or other tax refunds
Most common: corporate income tax refunds and VAT/GST recoverable in input-heavy businesses.
Distinct from customer receivables—counterparty is the government.
How It Arises – A Simple Example
Company estimates $5M tax liability and makes quarterly payments totaling $5.5M.
- Final tax return shows actual liability $4.8M
- Overpayment: $700k
- Record $700k Taxes Receivable (asset)
- Later: Receive $700k refund cash → reduce receivable
Or claim refundable R&D credit of $1M → Taxes Receivable until paid.
Accounting Treatment
- Recognized when refund claim is probable and estimable
- Current if expected recovery within 12 months
- Offset against tax liabilities if right exists
- Impairment if recovery doubtful (rare for government)
Income tax receivable from current year provision; deferred tax assets separate.
Balance Sheet Presentation
Under current assets as:
- 'Taxes Receivable'
- 'Income Taxes Receivable'
- 'VAT/GST Recoverable'
- 'Refundable Taxes'
- Sometimes in 'Other Receivables'
Footnotes detail type, year, and expected recovery.
Why Companies Have Taxes Receivable
- Conservative estimated tax payments
- Refundable credits (R&D, investment incentives)
- Input VAT > output VAT (capital-intensive or export firms)
- Timing differences in tax filings
- Loss carrybacks generating refunds
Analytical Implications
- Upcoming cash inflow (positive for liquidity)
- Effective tax rate insight (overpayments = high ETR)
- Tax planning aggressiveness
- Working capital component
- Recovery risk (audit delays/disputes)
Persistent large balances may indicate overpayment habits or complex tax structures.
Key Takeaways
Taxes Receivable are refundable overpayments or credits from tax authorities.
Common for income taxes and VAT/GST recoverable.
Current asset expecting cash recovery or offset.
Arise from conservative payments or refundable incentives.
Positive for future cash flow.
Monitor for tax strategy and potential audit risks.
Taxes Receivable
Amounts Owed to the Company from Taxing Authorities
Taxes Receivable represents refundable tax amounts or overpayments that the company expects to recover from government taxing authorities. These arise when tax payments (estimated payments, withholdings, or credits) exceed the actual tax liability for a period, or when tax credits/refunds are claimed. It is a current asset reflecting a claim against the government for excess taxes paid or eligible refunds.
Table of Contents
What Taxes Receivable Includes
Taxes Receivable covers claims against tax authorities for:
- Income tax overpayments (estimated payments > final liability)
- Refundable tax credits (R&D, green energy, foreign tax credits)
- Value-Added Tax (VAT) or Goods & Services Tax (GST) input credits exceeding output tax
- Withholding tax overpayments
- Property or other tax refunds
Most common: corporate income tax refunds and VAT/GST recoverable in input-heavy businesses.
Distinct from customer receivables—counterparty is the government.
How It Arises – A Simple Example
Company estimates $5M tax liability and makes quarterly payments totaling $5.5M.
- Final tax return shows actual liability $4.8M
- Overpayment: $700k
- Record $700k Taxes Receivable (asset)
- Later: Receive $700k refund cash → reduce receivable
Or claim refundable R&D credit of $1M → Taxes Receivable until paid.
Accounting Treatment
- Recognized when refund claim is probable and estimable
- Current if expected recovery within 12 months
- Offset against tax liabilities if right exists
- Impairment if recovery doubtful (rare for government)
Income tax receivable from current year provision; deferred tax assets separate.
Balance Sheet Presentation
Under current assets as:
- 'Taxes Receivable'
- 'Income Taxes Receivable'
- 'VAT/GST Recoverable'
- 'Refundable Taxes'
- Sometimes in 'Other Receivables'
Footnotes detail type, year, and expected recovery.
Why Companies Have Taxes Receivable
- Conservative estimated tax payments
- Refundable credits (R&D, investment incentives)
- Input VAT > output VAT (capital-intensive or export firms)
- Timing differences in tax filings
- Loss carrybacks generating refunds
Analytical Implications
- Upcoming cash inflow (positive for liquidity)
- Effective tax rate insight (overpayments = high ETR)
- Tax planning aggressiveness
- Working capital component
- Recovery risk (audit delays/disputes)
Persistent large balances may indicate overpayment habits or complex tax structures.
Key Takeaways
Taxes Receivable are refundable overpayments or credits from tax authorities.
Common for income taxes and VAT/GST recoverable.
Current asset expecting cash recovery or offset.
Arise from conservative payments or refundable incentives.
Positive for future cash flow.
Monitor for tax strategy and potential audit risks.
Related Terms
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