Disclosure T9 SD The major components of tax expense (income) shall be disclosed separately. Components of tax expense (income) may include: {a} {h} {C} {d} is) {f} (g) (11} current tax expense (income); any adjustments recognised in the period for current tax of prior periods; the amount of deferred tax expense (income) relating to the origination and reversal of tempormy di'erences; the amount of deferred tax expense (income) relating to changes in tax rates or the imposition of new taxes; the amount of the benet arising from a previously unrecognised tax loss; tax credit or temporary di'erence of a prior period that is used to reduce current tax expense; the amount of the benet from a previously unrecognised tax loss, tax credit or temporary difference of a prior period that is used to reduce deferred tax expense; deferred tax expense arising from the writedown; or reversal of a previous \"ritedown; of a deferred tax asset in accordance with paragraph 56; and the amount of tax expense (income) relating to those changes in accounting policies and errors that are included in profit or loss in accordance with M33108; because they cannot be accounted for retrospectively. 31 The following shall also be disclosed separately: (=1) (ab) ('3) (1:) (d) (a) (f) the aggregate current and deferred tax relating to items that are charged or credited directly to equity {see paragraph ISL-1}; the amount of income tax relating to each component of other comprehensive income (see paragraph til and M33 1111}; [deleted] an explanation of the relationship between tax expense (income) and accounting prot in either or both of the following forms: {i} a nlunerical reconciliation between tax expense (income) and the product of accounting prot multiplied by the applicable tax rate{s}, disclosing also the basis on which the applicable tax rate(s} is (are) computed; or (ii) a numerical reconciliation between the average effective tax rate and the applicable tax rate, disclosing also the basis on which the applicable tax rate is computed; an explanation of changes in the applicable tax rate{s) compared to the previous accounting period; the amount (and expiry,r date, if any) of deductible temporary differences, unused tax losses, and unused tax credits for which no deferred tax asset is recognised in the statement of nancial position; the aggregate amount of temporal? differences associated with investments in subsidiaries, branches and associates and interests in joint arrangements, for which deferred tax liabilities have not been recogn'sed (see paragraph 39); in respect of each type of temporary difference, and in respect of each type of unused tax losses and unused tax credits: {i} the amount of the deferred tax assets and liabilities recognised in the statement of nancial position for each period presented; (ii) the amount of the deferred tax income or expense recognised in profit or loss, if this is not apparent from the changes in the amounts recognised in the statement of financial position; (h) in respect of discontinued operations, the tax expense relating to: (i) the gain or loss on discontinuance; and (ii) the profit or loss from the ordinary activities of the discontinued operation for the period, together with the corresponding amounts for each prior period presented; (i) the amount of income tax consequences of dividends to shareholders of the entity that were proposed or declared before the financial statements were authorised for issue, but are not recognised as a liability in the financial statements; (j) if a business combination in which the entity is the acquirer causes a change in the amount recognised for its pre-acquisition deferred tax asset (see paragraph 67), the amount of that change; and (k) if the deferred tax benefits acquired in a business combination are not recognised at the acquisition date but are recognised after the acquisition date (see paragraph 68), a description of the event or change in circumstances that caused the deferred tax benefits to be recognised. 82 An entity shall disclose the amount of a deferred tax asset and the nature of the evidence supporting its recognition, when: (a) the utilisation of the deferred tax asset is dependent on future taxable profits in excess of the profits arising from the reversal of existing taxable temporary differences; and (b) the entity has suffered a loss in either the current or preceding period in the tax jurisdiction to which the deferred tax asset relates. 82A In the circumstances described in paragraph 52A, an entity shall disclose the nature of the potential income tax consequences that would result from the payment of dividends to its shareholders. In addition, the entity shall disclose the amounts of the potential income tax consequences practicably determinable and whether there are any potential income tax consequences not practicably determinable. 83 [Deleted]84 The disclosures required by paragraph 81(c) enable users of financial statements to understand whether the relationship between tax expense (income) and accounting profit is unusual and to understand the significant factors that could affect that relationship in the future. The relationship between tax expense (income) and accounting profit may be affected by such factors as revenue that is exempt from taxation, expenses that are not deductible in determining taxable profit (tax loss), the effect of tax losses and the effect of foreign tax rates. 85 In explaining the relationship between tax expense (income) and accounting profit, an entity uses an applicable tax rate that provides the most meaningful information to the users of its financial statements. Often, the most meaningful rate is the domestic rate of tax in the country in which the entity is domiciled, aggregating the tax rate applied for national taxes with the rates applied for any local taxes which are computed on a substantially similar level of taxable profit (tax loss). However, for an entity operating in several jurisdictions, it may be more meaningful to aggregate separate reconciliations prepared using the domestic rate in each individual jurisdiction. The following example illustrates how the selection of the applicable tax rate affects the presentation of the numerical reconciliation. Example illustrating paragraph 85 In 19X2, an entity has accounting profit in its own jurisdiction (country A) of 1,500 (19X1: 2,000) and in country B of 1,500 (19X1: 500). The tax rate is 30% in country A and 20% in country B. In country A, expenses of 100 (19X1: 200) are not deductible for tax purposes. The following is an example of a reconciliation to the domestic tax rate. 19X1 19X2 Accounting profit 2,500 3,000 Tax at the domestic rate of 30% 750 900Tax effect of expenses that are not deductible for tax purposes 60 30 Effect of lower tax rates in country B (50) (150) Tax expense 760 780 The following is an example of a reconciliation prepared by aggregating separate reconciliations for each national jurisdiction. Under this method, the effect of differences between the reporting entity's own domestic tax rate and the domestic tax rate in other jurisdictions does not appear as a separate item in the reconciliation. An entity may need to discuss the effect of significant changes in either tax rates, or the mix of profits earned in different jurisdictions, in order to explain changes in the applicable tax rate(s), as required by paragraph 81(d). Accounting profit 2,500 3,000 Tax at the domestic rates applicable to profits in the country concerned 700 750 Tax effect of expenses that are not deductible for tax purposes 60 30 Tax expense 760 780 86 The average effective tax rate is the tax expense (income) divided by the accounting profit. 87 It would often be impracticably to compute the amount of unrecognised deferred tax liabilities arising from investments in subsidiaries, branches and associates and interests in joint arrangements ( see paragraph 39). Therefore, this Standard requires an entity to disclose the aggregate amount of the underlying temporary differences but does not require disclosure of the deferred tax liabilities. Nevertheless, where practicable, entities are encouraged to disclose the amounts of the unrecognised deferred tax liabilities because financial statement users may find such information useful.87A Paragraph 82A requires an entity to disclose the nature of the potential income tax consequences that would result from the payment of dividends to its shareholders. An entity discloses the important features of the income tax systems and the factors that will affect the amount of the potential income tax consequences of dividends. 87B It would sometimes not be practicable to compute the total amount of the potential income tax consequences that would result from the payment of dividends to shareholders. This may be the case, for example, where an entity has a large number of foreign subsidiaries. However, even in such circumstances, some portions of the total amount may be easily determinable. For example, in a consolidated group, a parent and some of its subsidiaries may have paid income taxes at a higher rate on undistributed profits and be aware of the amount that would be refunded on the payment of future dividends to shareholders from consolidated retained earnings. In this case, that refundable amount is disclosed. If applicable, the entity also discloses that there are additional potential income tax consequences not practicably determinable. In the parent's separate financial statements, if any, the disclosure of the potential income tax consequences relates to the parent's retained earnings. 87C An entity required to provide the disclosures in paragraph 82A may also be required to provide disclosures related to temporary differences associated with investments in subsidiaries, branches and associates or interests in joint arrangements. In such cases, an entity considers this in determining the information to be disclosed under paragraph 82A. For example, an entity may be required to disclose the aggregate amount of temporary differences associated with investments in subsidiaries for which no deferred tax liabilities have been recognised (see paragraph 81(f)). If it is impracticably to compute the amounts of unrecognised deferred tax liabilities (see paragraph 87) there may be amounts of potential income tax consequences of dividends not practicably determinable related to these subsidiaries. 88 An entity discloses any tax-related contingent liabilities and contingent assets in accordance with AASB 137 Provisions, Contingent Liabilities and Contingent Assets. Contingent liabilities and contingent assets may arise, for example, from unresolved disputes with the taxation authorities. Similarly, where changes in tax rates or tax laws are enacted or announced after the reporting period, an entity discloses any significant effect of those changes on its current and deferred tax assets and liabilities (see AASB 110 Events after the Reporting Period)