Income tax expense comprises current and deferred tax. Income tax expense is recognised in the income statement except to the extent
that it relates to items recognised directly in equity, in which case it
is recognised in equity.
Current tax is the expected tax payable on the taxable income for
the year, using tax rates enacted or substantially enacted at the
balance sheet date, and any adjustments to current tax payable
in respect of previous years.
Deferred tax is recognised using the statement of financial position
liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. Deferred tax
liabilities are generally recognised for all taxable temporary
differences. Deferred tax assets and liabilities are not recognised for
temporary differences arising from the initial recognition of goodwill,
the initial recognition of other assets and liabilities in a transaction
that is not a business combination and that affects neither
accounting nor taxable profit, and differences relating to
investments in subsidiaries to the extent that they will probably not
reverse in the foreseeable future. Deferred tax is measured at tax
rates that are expected to be applied to the temporary differences
when they reverse, based on the laws that have been enacted or
substantively enacted at the balance sheet date.
Deferred tax assets, including deferred tax assets for tax loss carry
forwards, are recognised to the extent that the company has
sufficient taxable temporary differences or it is probable that future
taxable profits will be available against which deductible temporary
differences can be utilised and deferred tax assets realised.
The recoverable amount of deferred tax assets is reviewed at each
balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable income will be available to allow
all or part of the asset to be recovered.
Deferred tax assets and liabilities are not discounted.
Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related
dividend is recognised.
Deferred tax assets and liabilities are offset in the balance sheet when there is a legally enforceable right to offset current tax assets
against current tax liabilities and when the deferred income taxes are
levied by the same fiscal authority.