Annual Report 2012

Notes to the financial statements(Expressed in millions of RMB, unless otherwise stated)4 Significant accounting policies and accounting estimates (continued)(17) Income tax (continued)Current income tax and movements in deferred tax balances are recognised in profit or loss except to the extent that it relates toitems recognised in other comprehensive income or directly in equity, in which case the relevant amounts of tax are recognised inother comprehensive income or directly in equity, respectively.At the end of each reporting period, deferred tax assets and deferred tax liabilities are measured at the tax rates that are expectedto apply to the period when the asset is realised or the liability is settled according to the requirements of tax laws. The Group alsoconsiders the possibility of realisation and the settlement of deferred tax assets and deferred tax liabilities in the calculation.Current tax assets are offset against current tax liabilities, and deferred tax assets against deferred tax liabilities if the Group has thelegally enforceable right to offset current tax assets against current tax liabilities and the deferred tax assets and liabilities relate toincome taxes levied by the same taxation authority on the same taxable entity. Otherwise, the balances of deferred tax assets anddeferred tax liabilities, and movements therein, are presented separately from each other and are not offset.(18) Cash equivalentsCash equivalents are short-term, highly liquid investments that are readily convertible into known amounts of cash and which aresubject to an insignificant risk of changes in value, having been within three months of maturity at acquisition.(19) Profit distributionProposed dividends which are declared and approved after the end of each reporting period are not recognised as a liability in thestatement of financial position and are instead disclosed as a subsequent event after the end of each reporting period in the note tothe financial statements. Dividends payable are recognised as liabilities in the period in which they are approved.(20) Related partiesIf the Group has the power, directly or indirectly, to control, jointly control or exercise significant influence over another party, orvice versa, or where the Group and one or more parties are subject to common control or joint control from another party, they areconsidered to be related parties. Related parties may be individuals or enterprises. The Group’s related parties include but are notlimited to the following:(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)the Bank’s parents;the Bank’s subsidiaries;other entities which are controlled by the Bank’s parents;an investor who has joint control over the Group;an investor who can exercise significant influence over the Group;an associate of the Group;a jointly controlled entity of the Group;principal individual investors of the Group, and close family members of such individuals (principal individual investors are theindividual investors who have the power, directly or indirectly, to control, jointly control or exercise significant influence overanother party);key management personnel of the Group and close family members of such individuals (key management personnel representthose persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly orindirectly, including any director of that entity);key management personnel of the Bank’s parents and close family members of such individuals;other entities that are controlled or jointly controlled by the Group’s principal individual investors, key management personnel,or close family members of such individuals; anda post-employment benefit plan for the benefit of employees of the Group, or of any entity that is a related party of the Group.112 China Construction Bank Corporation annual report 2012