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Notes to the Financial Statements
Washington H. Soul Pattinson and Company Limited
Annual Report 2016
92
Taxation
NOTE 18
INCOME TAX EXPENSE (continued)
18
2016
2015
$’000
$’000
b) Reconciliation of prima facie tax expense
to income tax expense/(benefit):
Profit before income tax
130,361
58,603
Tax at the Australian tax rate of 30% (2015: 30%)
39,108
17,581
Tax effect of amounts which are not deductible/(taxable)
in calculating taxable income:
Sale of long term equity investments
(172)
(345)
Net Impairment (expense)
(11,235)
(13,662)
Franking credits received (excluding controlled and associate entities)
(11,379)
(9,965)
Tax effect of entities entering into the Washington H. Soul Pattinson and
Company Limited tax consolidated group
(7,379)
–
Deferred tax asset not recognised on current year net losses
2,864
3,749
Net effect of New Hope Corporation Limited’s Petroleum resource rent
tax expense/(benefit)
2,502
(673)
Tax (benefit) on the carrying value of equity accounted associates
(15,469)
(14,622)
Other
2,062
986
Total income tax expense/(benefit)
902
(16,951)
The effective tax rates are as follows:
0.7%
(29%)
c) Amounts recognised directly in equity
Aggregate current and deferred tax arising in the reporting period and not
recognised in net profit or loss but directly charged or credited to equity
Decrease/(increase) to deferred tax assets
4,917
(3,638)
(Decrease)/increase to deferred tax liabilities
(17,497)
695
Net deferred tax – (credited) directly to equity
(12,580)
(2,943)
d) Tax effect of impairments and tax losses
Impairments and unused tax losses for which no deferred tax asset
has been recognised
178,117
237,732
Potential tax benefit at 30%
53,435
71,320
Key Estimates:
Petroleum resource rent tax (PRRT)
As a result of the 100% acquisition of Bridgeport Energy Limited during 2013, the Group is subject to Petroleum
resource rent tax (PRRT) effective 1 July 2012 being the date of the extension of the PRRT to onshore petroleum
projects. The Group has accounted for the current and deferred tax impact of PRRT in accordance with the
requirements outlined in the income tax expense policy. As such, the Group has recorded current and deferred tax
assets and liabilities relating to PRRT at the prevailing PRRT rate at 31 July 2016 and 31 July 2015.
A subsidiary of the Group, New Hope Corporation Limited (New Hope), as head company of the New Hope income
tax consolidated group, has made a PRRT consolidation election and as such the New Hope tax consolidated group
includes two PRRT consolidated groups at 31 July 2016 and 31 July 2015. New Hope has accounted for its PRRT tax
balances in accordance with the stand alone taxpayer method in alignment with the tax funding arrangements.