annual report - Harvey Norman Company Reports & Announcements

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
4. Income Tax (continued)
The consolidated entity has not recognised deferred tax assets relating to tax losses of $228.10 million (2011: $194.27
million) which are available for offset against taxable profits of the companies in which the losses arose. The tax losses
of $228.10 million as at 30 June 2012 exclude the adjustments relating to support payments provided to Harvey
Norman Holdings (Ireland) Limited during 2010, 2011 and 2012 as agreed under the terms of an Advance Pricing
Arrangement with the Australian Taxation Office dated 6 February 2012.
At 30 June 2012, there is no recognised or unrecognised deferred income tax liability (2011: $0) for taxes that would
be payable on the unremitted earnings of certain subsidiaries, associates or joint ventures, as the consolidated entity
has no liability for additional taxation should such amounts be remitted.
Tax consolidation
Harvey Norman Holdings Limited and its 100% owned Australian resident subsidiaries are members of a tax
consolidated group. Harvey Norman Holdings Limited is the head entity of the tax consolidated group. Members of
the group have entered into a tax sharing agreement which provides for the allocation of income tax liabilities
between the entities should the head entity default on its tax payment obligations. At the balance date, the
possibility of default is remote.
Wholly owned companies of the tax consolidated group have entered into a tax funding agreement. The funding
agreement provides for the allocation of current and deferred taxes on a modified standalone basis in accordance
with the principles as outlined in UIG 1052 Tax Consolidation Accounting.
The allocation of taxes under the tax funding agreement is recognised as an increase/decrease in the subsidiaries‟
inter-company accounts with the tax consolidated group head company Harvey Norman Holdings Limited.
79