FRONTLINE COVER FA 070606 CR2.indd

66
frontline technologies corporation ltd
annual report 2006
> notes to the financial statement
for the year ended 31 march 2006
11. Tax (cont’d)
Group
A loss-transfer system of group relief (“group relief system”) for companies was introduced in Singapore with effect
from year of assessment 2004. Under the group relief system, a company belonging to a group may transfer its current
year unabsorbed capital allowances, current year unabsorbed trade losses and current year unabsorbed donations
(loss items) to another company belonging to the same group, to be deducted against the assessable income of the
latter company.
The Group has unutilised tax losses of approximately $2,690,000 (2005: $3,480,000) available for offset against
future taxable income subject to the agreement by tax authorities and compliance with certain tax regulations
in the respective countries in which certain subsidiaries operate. The potential deferred tax asset arising from the
unabsorbed tax losses of certain subsidiaries have not been recognised in the financial statements due to uncertainty
in its realisation.
The reconciliation of the tax expense and the amount obtained by applying the applicable tax rate on accounting
profit before tax is as follows:
Group
2006 2005
$ $
Profit before tax 11,110,486 8,209,870
Tax at the domestic tax rate of 20% (2005: 20%) 2,222,097 1,641,974
Income not taxable (440,471) (221,095)
Expenses not tax deductible 123,954 301,062
Leasing income recognised only for tax purposes 721,579 728,105
Utilisation of tax losses brought forward not recognised in prior years (45,615) (527,885)
Utilisation of capital allowances brought forward not recognised in prior years (458) (1,165,474)
(Over)/under provision in prior year
– current tax 213,943 (31,531)
– deferred tax – (191,305)
Change in tax rates 115,465 116,551
Tax relief (1,042,434) (24,918)
Effect of different tax rates in other countries 600,434 650,179
Deferred tax asset not recognised 41,542 340,749
Partial tax exemption (30,280) (13,159)
Share of associates’ tax (830,883) (555,779)
Others 163,543 275,733
1,812,416 1,323,207