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Income Tax Expenses

1.3 Income Tax Expenses

2019

2018

$’000

$’000

1.3: Income Tax Expense (Competitive Neutrality)

Income tax expense

A reconciliation of income tax applicable to accounting profit before income tax at the statutory income tax rate to income tax expense at the Mint's effective income tax rate for the year ended 30 June 2019 and 2018 is as follows:

Profit before Income Tax Expense

11,987

19,774

Less profit of non-contestable activities

( 683)

( 206)

Profit/(loss) before Income Tax Expense relating to contestable activities

11,304

19,568

At the statutory tax rate of 30% (2019: 30%)

3,391

5,870

Less tax on R&D incentive

-

(47)

Add tax effect amounts which are not taxable in calculating taxable income

4

5

Income tax expense reported in the Statement of Comprehensive Income

3,395

5,828

Current income tax:

Current income tax charge

3,442

5,990

Deferred income tax:

Relating to origination and reversal of timing differences

( 47)

( 162)

Income tax (benefit)/expense

3,395

5,828

Statement of Changes in Equity

Plant and Equipment - revaluation

( 42)

-

Income tax (benefit)/expense reported in equity

( 42)

-

Accounting Policy

Taxation

Except for the competitive neutrality arrangements outlined below, the Mint is exempt from all forms of taxation except Fringe Benefits Tax (FBT) and Goods and Services Tax (GST). Revenues, expenses and assets are recognised net of GST except:

- where the amount of GST incurred is not recoverable from the Australian Taxation Office; and

- for receivables and payables.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the ATO is included in other receivables or other payables in the Statement of Financial Position.

Cash flows and commitments are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the ATO, are presented as operating cash flows.

Competitive Neutrality

The Mint sells collector coins and minted non-coin products on a for-profit basis. Under Competitive Neutrality arrangements, the Mint is required to make Australian Income Tax and ACT Payroll Tax Equivalent payments to the Government, in addition to payments for FBT and GST. Notional interest calculation for purposes of competitive neutrality is based on the current 10-year market bond rate.

The income tax expense or benefit for the period is the tax payable on the current period’s taxable income based on the company tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements and to unused tax losses.

Accounting Judgements and Estimates

Recovery of deferred tax assets

Deferred tax assets are recognised for deductible temporary differences only if the Mint considers it is probable that future taxable amounts will be available to utilise those temporary differences and unused tax losses.

1.3 Income Tax Expenses

1.3: Income Tax Expense (Competitive Neutrality) - continued

Deferred tax calculations for the income year ended 30 June 2019

Opening balance

Recognised in profit or loss

Recognised directly in equity

Closing balance

$’000

$’000

$’000

$’000

Deferred tax (liabilities)/assets in relation to:

Receivables

73

(1)

-

72

Leasehold improvements - revaluation

44

(85)

-

(41)

Plant and equipment at cost

43

-

-

43

Plant and equipment - revaluation

(363)

-

(42)

(405)

R&D capitalised

(133)

-

-

(133)

Other payables

27

(1)

-

26

Employee provisions

1,305

133

-

1,438

Make-good provision

8

3

-

11

Tax liabilities (payroll tax liability)

287

(2)

-

285

1,291

47

( 42)

1,296

Deferred tax calculations for the income year ended 30 June 2018

Opening balance

Recognised in profit or loss

Recognised directly in equity

Closing balance

$’000

$’000

$’000

$’000

Deferred tax (liabilities)/assets in relation to:

Receivables

-

73

-

73

Leasehold improvements - revaluation

44

-

-

44

Plant and equipment at cost

43

-

-

43

Plant and equipment - revaluation

(363)

-

-

(363)

R&D capitalised

(133)

-

-

(133)

Other payables

40

(13)

-

27

Employee provisions

1,279

26

-

1,305

Make-good provision

6

2

-

8

Tax liabilities (payroll tax liability)

213

74

-

287

1,129

162

-

1,291