Income tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from
profit as reported in the statement of comprehensive income because of items of income or
expense that are taxable or deductible in other years and items that are never taxable or
deductible. The company's liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the end of the reporting period.
Deferred tax is recognised on timing differences between the carrying amounts of assets
and liabilities in the financial statements and the corresponding tax bases used in the
computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable
timing differences. Deferred tax assets are generally recognised for all deductible temporary
differences to the extent that it is probable that taxable profits will be available against which
those deductible timing differences can be utilised. The carrying amount of deferred tax
assets is reviewed at the end of each reporting period and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to allow all or part of the asset
to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in
the period in which the liability is settled or the asset realised, based on tax rates (and tax
laws) that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax liabilities are presented within provisions for liabilities and deferred tax assets
within debtors. The measurement of deferred tax liabilities and assets reflect the tax
consequences that would follow from the manner in which the Company expects, at the end
of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Current and deferred tax are recognised in profit or loss for the year, except when they relate
to items that are recognised in other comprehensive income or directly in equity, in which
case current and deferred tax are recognised in other comprehensive income or directly in
equity respectively.