Osim FR 050407.indd

Notes to the Financial Statements - 31 December 2006 (cont’d)2. Summary of significant accounting policies (cont’d)2.25 Income taxes (cont’d)b) Deferred taxDeferred income tax is provided using the liability method on temporary differences at the balance sheet date betweenthe tax bases of assets and liabilities and their carrying amounts for fi nancial reporting purposes.Deferred tax liabilities are recognised for all taxable temporary differences, except:• Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability ina transaction that is not a business combination and, at the time of the transaction, affects neither theaccounting profi t nor taxable profi t or loss; and• In respect of taxable temporary differences associated with investments in subsidiaries, associated companiesand interests in joint ventures, where the timing of the reversal of the temporary differences can be controlledand 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 taxcredits and unused tax losses, to the extent that it is probable that taxable profi t will be available against which thedeductible temporary differences, and the carry-forward of unused tax credits and unused tax losses can be utilisedexcept:• Where the deferred income tax asset relating to the deductible temporary difference arises from the initialrecognition of an asset or liability in a transaction that is not a business combination and, at the time of thetransaction, affects neither the accounting profi t nor taxable profi t or loss; and• In respect of deductible temporary differences associated with investments in subsidiaries, associatedcompanies and interest in joint ventures, deferred tax assets are recognised only to the extent that it is probablethat the temporary differences will reverse in the foreseeable future and taxable profi t will be available againstwhich the temporary differences can be utilised.The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extentthat it is no longer probable that suffi cient taxable profi t will be available to allow all or part of the deferred income taxasset to be utilised. Unrecognised deferred income tax assets are reassessed at each balance sheet date and arerecognised to the extent that it has become probable that future taxable profi t will allow the deferred tax asset to berecovered.Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year whenthe asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantivelyenacted at the balance sheet date.Notes to the Financial Statements 103Annual Report 2006