Temporary Differences in the context of tax refer to the variations that occur when comparing the carrying amount of an asset or liability in the accounting records to its tax base. These differences can result in either a taxable amount or a deductible amount that will impact future taxable profits or tax expenses. For example, suppose a company recognizes revenue in its financial statements before it is taxable by the tax authorities. In that case, this creates a Temporary Difference, which may lead to the recognition of a deferred tax liability. On the other hand, when expenses are deductible for tax purposes before they are recognized in financial accounting, it creates a Temporary Difference leading to a deferred tax asset. Temporary Differences are crucial considerations in corporate accounting, as they impact the assessment and planning of tax strategies.