104
ANNUAL REPORT 2016
NOTES TOTHE FINANCIAL STATEMENTS
30 JUNE 2016
(Continued)
4.
SIGNIFICANT ACCOUNTING POLICIES (continued)
4.14 Income taxes
Income taxes include all domestic and foreign taxes on taxable profit. Income taxes also include other taxes, such as withholding
taxes, which are payable by foreign subsidiaries and associates on distributions to the Group and Company, and real property gains
taxes payable on disposal of properties.
Taxes in the statement of profit or loss and other comprehensive income comprise current tax and deferred tax.
(a)
Current tax
Current tax expenses are determined according to the tax laws of each jurisdiction in which the Group operates and include
all taxes based upon the taxable profits (including withholding taxes payable by foreign subsidiaries on distribution of retained
earnings to companies in the Group), and real property gains taxes payable on disposal of properties.
(b)
Deferred tax
Deferred tax is recognised in full using the liability method on temporary differences arising between the carrying amount of an
asset or liability in the statement of financial position and its tax base.
Deferred tax is recognised for all temporary differences, unless the deferred tax arises from goodwill or the initial recognition
of an asset or liability in a transaction which is not a business combination and at the time of transaction, affects neither
accounting profit nor taxable profit.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits would be available against
which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. The carrying amount
of a deferred tax asset is reviewed at the end of each reporting period. If it is no longer probable that sufficient taxable profits
would be available to allow the benefit of part or all of that deferred tax asset to be utilised, the carrying amount of the deferred
tax asset would be reduced accordingly. When it becomes probable that sufficient taxable profits would be available, such
reductions would be reversed to the extent of the taxable profits.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current
tax liabilities and when the deferred income taxes relate to the same taxation authority on either:
(i)
the same taxable entity; or
(ii)
different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets
and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or
assets are expected to be settled or recovered.
Deferred tax would be recognised as income or expense and included in the profit or loss for the period unless the tax relates
to items that are credited or charged, in the same or a different period, directly to equity, in which case the deferred tax would
be charged or credited directly to equity.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised
or the liability is settled, based on the announcement of tax rates and tax laws by the Government in the annual budgets which
have the substantive effect of actual enactment by the end of each reporting period.
4.15 Provisions
Provisions are recognised when there is a present obligation, legal or constructive, as a result of a past event, when it is probable that
an outflow of resources embodying economic benefits would be required to settle the obligation and a reliable estimate can be made
of the amount of the obligation. Where the Group expects a provision to be reimbursed (for example, under an insurance contract),
the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.
If the effect of the time value of money is material, the amount of a provision would be discounted to its present value at a pre-tax rate
that reflects current market assessments of the time value of money and the risks specific to the liability.
Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is no longer probable
that an outflow of resources embodying economic benefits would be required to settle the obligation, the provision would be
reversed.
