Annual Report 2010 - Christchurch City Council

Income taxes Financial statements Annual Report
Christchurch Otautahi
2010
p167.
Notes to financial statements
11. Income taxes
(a) Components of tax expense
Parent
Group
30 Jun 10 30 Jun 09 30 Jun 10 30 Jun 09
Actual Actual Actual Actual
$000s $000s $000s $000s
Current tax expense/(income) - - 28,183 32,934
Adjustments to current tax of prior years - - (231) (535)
Deferred tax expense/(income) 2,038 788 75,892 (4,494)
Deferred tax expense/(income) from change in tax rates (175) - (13,637) -
Deferred tax expense relating to use of prior year losses - - 33 42
Total tax expense/(income) 1,863 788 90,240 27,947
Reconciliation of prima facie income tax:
(Profit)/loss before tax 109,720 64,147 95,423 120,556
Income tax expense calculated at standard tax rate 32,916 19,244 28,627 36,167
Non-deductible expenses - - 882 412
Non-assessable income and deductible items 18,412 (2,464) 5,552 (8,689)
Effect on deferred tax balances of change in tax rate (175) - (13,637) -
Tax loss not recognised as deferred tax asset - - - 138
Previously unrecognised and unused tax losses now recognised as deferred
- - (1,218) 42
tax assets
(Over)/under provision of income tax in previous year - - 788 127
Imputation adjustment (49,290) (15,992) (499) (250)
Deferred tax on removal of building depreciation - - 69,745 -
Total tax expense/(income) 1,863 788 90,240 27,947
The tax rate in the above reconciliation is the corporate tax rate of
30% payable by New Zealand companies on taxable profits under
New Zealand tax law.
Council's tax losses for the current financial year amount to $4.5
million. These will be utilised by way of subvention receipt of $4.5
million. The subvention receipts have been accrued as at 30 June
2010. In May 2010, the Government announced a reduction in the
rate of company tax from 30% to 28%, effective from 1 April 2011.
The effect of this on the Group’s deferred tax balances has been
reflected in the tax expense for the year as shown above.
The group deferred tax expense and provision were also affected
as a result of a provision in the 2010 Government Budget that
effectively removed the ability to claim tax depreciation on
buildings with a useful life of 50 years or greater with effect from
the 2012 financial year. This change has resulted in a substantial
increase in the group deferred tax expense for the year, and a
corresponding increase in the group deferred tax liability