Notes to Financial Statements

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68Middle East Development Singapore Ltd.Annual Report 2008Notes to Financial Statements30 June 200824 FINANCE COSTGroup2008 2007$ $Interest on obligations under fi nancial leases 12,696 19,530Interest on bank overdrafts and loans 15,031 38,099Interest on trade bills 9,059 11,781Total borrowing costs 36,786 69,41025 INCOME TAX EXPENSEGroup2008 2007$ $Current tax year expense 44,031 183,736Under (Over) provision for prior years 439,636 (67,618)Deferred tax (credit) expense relating to origination and reversal of temporarydifferences (105,158) 59,439Total income tax expense 378,509 175,557Domestic income tax is calculated at 18% (2007 : 18%) of the estimated assessable profi t for the year. Taxation forother jurisdictions is calculated at the rates prevailing in the relevant jurisdictions.The total charge for the year can be reconciled to the accounting loss as follows:Group2008 2007$ $Loss before income tax (4,772,090) (141,094)Income tax expense at 18% (858,976) (25,397)Effect on expenses that are not deductible 448,133 52,737Effect on revenue that is exempt from taxation (1,038) (35,887)Effect of previously unrecognised tax losses nowrecognised as deferred tax assets (3,171) 98,181Under (Over) provision of tax in prior years 439,636 (67,618)Effect of difference in tax rate in different jurisdictions (21,081) 96,846Effect of deferred tax asset not recognised 344,286 –Effect of reduction in tax rate – 10,432Others 30,720 46,263Total income tax expense 378,509 175,557
Middle East Development Singapore Ltd.Annual Report 2008 69Notes to Financial Statements30 June 200825 INCOME TAX EXPENSE (Cont’d)The following are the major deferred tax liabilities and assets recognised by the Group, and the movements thereon,during the current and prior reporting periods:GroupAcceleratedtaxdepreciation Provision Others Total$ $ $ $At 1 July 2006 (9,776) (8,358) (16,982) (35,116)Credit/(Charge) to profi t or loss for the year 5,708 (65,326) 179 (59,439)At 30 June 2007 (4,068) (73,684) (16,803) (94,555)Credit to profi t or loss for the year 506 73,684 30,968 105,158Effect of change in tax rate 143 – (622) (479)At 30 June 2008 (3,419) – 13,543 10,124Certain deferred tax assets and liabilities have been offset in accordance with the Group’s accounting policies.The following is the analysis of the deferred tax balances for balance sheet purposes:Group2008 2007$ $Deferred tax assets 11,300 11,833Deferred tax liabilities (1,176) (106,388)10,124 (94,555)Subject to the agreement by the tax authorities, at the balance sheet date, the Group has unutilised tax losses of$5,572,000 (2007: $3,659,000) available for offset against future profi ts. No deferred tax asset has been recogniseddue to the unpredictability of future profi t streams and uncertainty of the eligibility of such tax losses carryforward.The Group’s unutilised tax losses, may be carried forward indefi nitely subject to the conditions imposed by lawincluding the retention of majority shareholders as defi ned.
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