Note 9: Current Tax $9,816. This is the tax payable to the ATO....

Note 9: Current Tax $9,816. This is the tax payable to the ATO.

You don't want the deferred tax assets to be realised. That will mean the company will be making operating losses.

Thanks

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The above comment is incorrect and would mislead members.

Current Tax expense is the amount that "would be" payable to the ATO, however nothing is payable.

Per Page 69.

(c) Taxation Losses Unused taxation losses for which no deferred tax asset has been recognised 54,104 Potential tax benefit @ 30% 16,231.

GRR does not "pay tax" - i.e has carry forward losses - this explains why there is no Franking Credits attached to the dividend.

The recognition of deferred tax assets in this case is a "neutral thing" as it recognizes merely that Accounting depreciation/amortisation is significantly higher than the taxation equivalent. It is "non cash". It is largely driven in this case to write down the value of the fixed assets (aka impairment), because the "currently expected future net cash flows does not support these assets value". In the long term, the deferred asset generated by this particular issue will be reversed out (i.e realised, as opposed to recognised), when:

1. Tax depreciation catches up with the impairment i.e accelerated accounting depreciation. OR
2. A subsequent reassessment of the CGU future cash flows indicates the impairment is to be reversed.

The later being very good. The realization of a deferred tax asset, is a good thing, however it is again non cash.

The recognition of a deferred tax balance however would be great thing. As it means the previously generated income tax losses are now realisable. Meaning that GRR's position is that it pays income tax. Paying tax is a good thing - as it means you have confidence that you will be paying taxes in the future - i.e higher taxable profits compared to today, when it is not recognised. GRR would then be in a position to pay "franked dividends".

Deferred Tax Accounting is an area where non Accountants struggle.

Please read the below to assist.

Per Page 48.

(l) Income tax income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end