Sustained Innovation and Creativity - Toyota Industries Corporation

15. Income taxes(1) The signifi cant components of deferred tax assets and liabilities as of March 31, 2006 and 2005 are as follows:Deferred tax assets:Allowance for retirement benefi ts ¥ 15,561 ¥ 12,842 $ 132,468Trade receivables 2,867 5,270 24,406Accrued expenses 6,739 6,049 57,368Net operating loss carry-forwards for tax purposes 2,012 1,979 17,128Depreciation 4,538 5,222 38,631Securities 2,529 2,195 21,529Enterprise tax payable 1,045 1,059 8,896Other 14,119 15,962 120,192Subtotal 49,410 50,578 420,618Less — valuation allowance (2,705) (2,689) (23,027)Total deferred tax assets 46,705 47,889 397,591Deferred tax liabilities:Other securities 695,355 392,618 5,919,426Depreciation 6,004 5,355 51,111Land 1,112 1,110 9,466Reserve for advanced depreciation 520 537 4,426Reserve for special depreciation 678 529 5,772Other 3,460 5,981 29,454Total deferred tax liabilities 707,129 406,130 6,019,655Net deferred tax liabilities ¥(660,424) ¥(358,241) $(5,622,064)2006Millions of yen2005Thousands ofU.S. dollars2006Net deferred tax liabilities consist of the following components on the consolidated balance sheets.Current assets — deferred tax assets ¥ 18,096 ¥ 20,379 $ 154,048Investments and other assets — deferred tax assets 6,842 7,234 58,245Current liabilities — deferred tax liabilities (3,858) (4,067) (32,842)Long-term liabilities — deferred tax liabilities (681,504) (381,787) (5,801,515)Net deferred tax liabilities ¥(660,424) ¥(358,241) $(5,622,064)2006Millions of yen2005Thousands ofU.S. dollars2006(2) Reconciliations of differences between the statutory rate of income taxes and the effective rate of income taxes forthe years ended March 31, 2006, 2005 and 2004 are as follows:2006 2005 2004Statutory rate of income taxes 39.9% 39.9% 41.2%Addition (reduction) in taxes resulting from:Dividends income and others permanently not recognized as taxable income (5.0) (3.8) (3.4)Equity in earnings of affi liates – (3.8) –Other 0.2 (0.7) (1.9)Effective rate of income taxes 35.1% 31.6% 35.9%Toyota Industries Corporation Annual Report 200689