2013 Apr 15 Annual Report 2012 - Phosphagenics

Notes to the consolidated fi nancial statements
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(h) Government grants
Government grants are recognised where there is reasonable assurance that the grant will be
received and all attached conditions will be complied with. When the grant relates to an expense item,
it is recognised as income over the period necessary to match the grant on a systematic basis to the
costs that it is intended to compensate.
Income is also recognised where there is a reasonable assurance that a cash benefi t will arise under
the R&D tax incentive from eligible expenditure incurred during the period.
(i) Income Tax
Current tax assets and liabilities for the current and prior periods are measured at the amount expected
to be recovered from or paid to the taxation authorities based on the current period’s taxable income.
The tax rates and tax laws used to compute the amount are those that are enacted or substantively
enacted by the reporting date.
Deferred income tax is provided on all temporary differences at the reporting date between the tax bases
of assets and liabilities and their carrying amounts for fi nancial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences:
80
• except where the deferred income tax liability arises from the initial recognition of an asset or liability
in a transaction that is not a business combination and, at the time of the transaction, affects neither
the accounting profi t nor taxable profi t or loss; and
• in respect of taxable temporary differences associated with investments in subsidiaries, associates
and interests in joint ventures, except where the timing of the reversal of the temporary differences can
be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward
of unused tax assets and unused tax losses, to the extent that it is probable that taxable profi t will
be available against which the deductible temporary differences, and the carry-forward of unused tax
assets and unused tax losses can be utilised:
• except where the deferred income tax asset relating to the deductible temporary difference arises
from the initial recognition of an asset or liability in a transaction that is not a business combination
and, at the time of the transaction, affects neither the accounting profi t nor taxable profi t or loss; and
• in respect of deductible temporary differences associated with investments in subsidiaries, associates
and interests in joint ventures, deferred tax assets are only recognised to the extent that it is probable
that the temporary differences will reverse in the foreseeable future and taxable profi t will be available
against which the temporary differences can be utilised.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced
to the extent that it is no longer probable that suffi cient taxable profi t will be available to allow all or part
of the deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to the
extent that it has become probable that future taxable profi t will allow the deferred asset to be recovered.
Deferred income 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 tax rates (and tax laws) that have been
enacted or substantively enacted at the reporting date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in the
statement of comprehensive income.
Tax consolidation legislation
Phosphagenics Limited and its wholly-owned Australian controlled entities elected to form a tax
consolidation group as of 1 July 2009. As a result the tax base of intangible assets was reset such that
the deferred tax liability of $13,830,498 was reversed during the year ended 31 December 2011.
PHOSPHAGENICS ANNUAL REPORT 2012