Abacus Property Group – Annual Financial Report 2018
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ABACUS PROPERTY GROUP<br />
NOTES TO THE FINANCIAL STATEMENTS<br />
30 JUNE <strong>2018</strong><br />
22. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES<br />
(y) Taxation<br />
The <strong>Group</strong> comprises taxable and non-taxable entities. A liability for current and deferred tax and tax expense is<br />
only recognised in respect of taxable entities that are subject to income tax and potential capital gains tax as<br />
detailed below.<br />
Trust income tax<br />
Under current Australian income tax legislation AT, AIT, ASPT, AHT and ADIFII are not liable to Australian<br />
income tax provided security holders are presently entitled to the taxable income of the trusts and the trusts<br />
generally distribute their taxable income.<br />
Company income tax<br />
AGHL and its Australian resident wholly-owned subsidiaries, ASOL and its Australian resident wholly-owned<br />
subsidiaries and AHL and its Australian resident wholly-owned subsidiaries have formed separate tax<br />
consolidation groups. AGHL, ASOL and AHL have entered into tax funding agreements with their Australian<br />
resident wholly-owned subsidiaries, so that each subsidiary agrees to pay or receive its share of the allocated tax<br />
at the current tax rate.<br />
The head tax entity and the controlled entities in each tax consolidated group continue to account for their own<br />
current and deferred tax amounts.<br />
In addition to its own current and deferred tax amounts, the head tax entity also recognises the current tax<br />
liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed<br />
from controlled entities in the tax consolidated group.<br />
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as<br />
amounts receivable from or payable to other entities in the group.<br />
Any difference between the amounts assumed and amounts receivable or payable under the tax funding<br />
agreements are recognised as a contribution to (or distribution from) wholly-owned tax consolidated entities.<br />
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be<br />
recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are<br />
those that are enacted or substantively enacted by the balance sheet date.<br />
Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused tax<br />
assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the<br />
deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be<br />
utilised, except:<br />
- when the deferred income tax asset relating to the deductible temporary difference arises from the initial<br />
recognition of an asset or liability in a transaction that is not a business combination and, at the time of the<br />
transaction, affects neither the accounting profit nor taxable profit or loss; or<br />
- when the deductible temporary differences associated with investments in subsidiaries, associates and<br />
interests in joint ventures, deferred tax assets are only recognised to the extent that it is probable that the<br />
temporary differences will reverse in the foreseeable future and taxable profit will be available against which<br />
the temporary differences can be utilised.<br />
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the<br />
extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred<br />
income tax asset to be utilised.<br />
Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the<br />
extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.<br />
Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of<br />
assets and liabilities and their carrying amounts for financial reporting purposes.<br />
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