Inland Revenue Act 2017 · As enacted · Part I
23. Accrual basis accounting
Official English translation. The Sinhala text prevails. Open the official Sinhala text, official PDF on documents.gov.lk
Official translationFrom Department of Government Printing, unchanged
Under the accrual basis of accounting, a person –
derives an amount when it is receivable by the person; and
incurs an expense or other amount when it is payable by the person.
An amount shall be receivable by a person when the person becomes entitled to receive it, even if the time for discharge of the entitlement is postponed or the entitlement is payable by instalments.
An amount shall be treated as payable by the person when all the events that determine liability have occurred and the amount of the liability can be determined with reasonable accuracy, but not before economic performance with respect to the amount occurs.
For the purposes of subsection (3), economic performance occurs –
with respect to the acquisition of services or assets, at the time the services or assets are provided;
with respect to the use of an asset, at the time the asset is used; and
in any other case, at the time the person makes payment in full satisfaction of the liability.
Where in calculating income on an accrual basis an inaccuracy referred to in subsection (6) or (7) occurs –
appropriate adjustments shall be made at the time the payment is received or made to remedy the inaccuracy, or at the time of the deemed inaccuracy;
and
the Commissioner-General may require the person to include the appropriate adjustment in the year of assessment in which the inaccuracy originally occurred notwithstanding the time limits specified in Part II of this Act for the amendment of assessments.
An inaccuracy occurs –
when a person is calculating for a payment of a particular quantity to which the person is entitled or that the person is obliged to make; and
subsequently that entitlement or obligation being satisfied by a payment received or made by the person, as the case requires, of a different amount, including by reason of a change in currency valuations.
An inaccuracy is deemed to occur when –
a person is calculating for a payment of a particular quantity that the person is obliged to make; and
subsequently that obligation is not satisfied by a payment being made by the person within three years of the obligation arising.