2004-05 Annual Report - Australia Post

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
For non-specialised plant and equipment, fair value
is established by reference to a market selling price
where an active liquid market exists. Where no active
liquid market exists but current evidence exists for
similar assets, then fair value is determined using
best available market evidence.
(iii) Frequency of revaluation
Freehold land and buildings have been revalued as at
30 June 2005. Plant and equipment assets, including
assets under finance leases, are recorded at fair value
and are subject to annual review.
(iv) Conduct of revaluations
Revaluations of property assets are conducted by
independent valuers.
Revaluations of plant and equipment and leasehold
improvements are at directors’ valuation and are subject
to independent valuation at least every five years.
(l) Intangibles
Intangible assets comprise goodwill, customer
contracts and computer software.
Goodwill represents the excess of the purchase
consideration over fair value of identifiable net assets
acquired at the time of acquisition of a business or shares
in an entity. Goodwill is amortised on a straight-line basis
over the period during which benefits are expected to be
received to a maximum of 20 years.
Customer contracts acquired through the acquisition
of a business are carried at allocated cost and amortised
over the period during which the benefits are expected
to be recovered to a maximum of 20 years.
Computer software is carried at cost and is amortised
on a straight-line basis over its anticipated useful life,
being four to eight years.
(m) Taxation
The corporation is subject to all Federal, State and local
government taxes and charges.
Income tax has been brought to account using the
liability method of tax effect accounting, whereby
the income tax expense in the Statement of Financial
Performance is matched with the accounting profit
after allowing for permanent differences. Income tax
on net cumulative timing differences is set aside to
the deferred income tax and future income tax benefit
accounts at the rates which are expected to apply
when those timing differences reverse.
Revenues, expenses and assets are recognised net of
Goods and Services Tax (GST), except:
° where the GST incurred on a purchase of goods
and services is not recoverable from the taxation
authority, in which case the GST is recognised
as part of the cost of acquisition of the asset or
as part of the expense item as applicable
° receivables and payables are stated with the
amount of GST included.
Cash flows are included in the Statement of Cash
Flows on a gross basis and the GST component of cash
flows arising from investing and financing activities,
which is recoverable from, or payable to, the taxation
authority, are classified as operating cash flows.
Tax consolidation
The company and all its wholly owned Australian
FOR THE YEAR ENDED 30 JUNE 2005
resident entities are part of a tax-consolidated group
under Australian taxation law. The corporation is the
head entity in the tax-consolidated group. Current
and deferred tax balances of the members of the tax
consolidated group are recognised in the financial
statements of the corporation (as head entity in the
tax consolidated group).
Due to the existence of tax funding arrangements
between the entities in the tax consolidated group,
amounts are recognised as payable to or receivable
by the corporation and each member of the group
in relation to the tax contribution amounts paid or
payable between the corporation and the other
members of the tax-consolidated group in accordance
with the arrangements.
(n) Employee benefits
(i) Benefits
Liabilities for services rendered by employees are
recognised at the reporting date to the extent that
they have not been settled.
Liabilities for wages and salaries (including non-monetary
benefits) and annual leave are measured at their nominal
amounts. Other employee benefits expected to be
settled within 12 months of their reporting date are also
measured at their nominal amounts.
The nominal amount is calculated with regard to the
rates expected to be paid on settlement of the liability.
All other employee benefits expected to be settled
beyond 12 months are measured as the present value of
the estimated future cash outflows to be made in respect
of services provided by employees up to the reporting
date. The 10-year Commonwealth Government bond rate
is used to discount these liabilities.
(ii) Superannuation
Generally the corporation meets its superannuation
obligations (including those imposed under the
Superannuation Guarantee (Administration) Act 1992)
through the Australia Post Superannuation Scheme (APSS)
and through the Superannuation Act 1976 (refer note 29).
Amounts paid or payable by the corporation are
charged to expense.
(iii) Leave
The liability for employee benefits includes provision
for annual leave and long service leave. The liability
for long service leave is established by reference to
the work of an actuary as at balance date, with the
estimate of present value taking into account attrition
rates and pay increases through promotion and
inflation. No liability for sick leave is recognised, as
benefits lapse with termination of employment and
experience indicates that the pattern of sick leave
taken is less than the entitlement accumulating.
(iv) Workers’ compensation
The corporation is a licence holder under the Safety,
Rehabilitation and Compensation Act 1988 (SRC Act).
The corporation mostly self-insures its liability for
workers’ compensation. Claims are recognised in the
financial statements and measured by the discounted
value of an annuity. The adequacy of the provision is
established by reference to the work of an actuary as at
balance date, with the estimate of present value taking
into account pay increases, attrition rates, interest rates
and the time over which settlement is made.
Australia Post Annual Report 2004/05 Financial and Statutory Reports Notes to and forming part of the financial statements
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