Telstra 2009 Annual Report Download - page 131

Telstra Corporation Limited and controlled entities
116
Notes to the Financial Statements (continued)
(e) Our deferred tax assets not recognised in the statement of financial
position may be used in future years if the following criteria are met:
• our controlled entities have sufficient future taxable profit to
enable the income tax losses and temporary differences to be
offset against that taxable profit;
• the Telstra Entity and our controlled entities have sufficient future
capital gains to be offset against those capital losses;
• we continue to satisfy the conditions required by tax legislation to
be able to use the tax losses; and
• there are no future changes in tax legislation that will adversely
affect us in using the benefit of the tax losses.
As at 30 June 2009, the deferred tax assets not recognised in our
statement of financial position are able to be carried forward
indefinitely for both our domestic and offshore operations.
Tax consolidation
The Telstra Entity and its Australian resident wholly owned entities
previously elected to form a tax consolidated group. As a
consequence of the election to enter tax consolidation, the tax
consolidated group is treated as a single entity for income tax
purposes.
The Telstra Entity, as the head entity in the tax consolidated group,
recognises, in addition to its own transactions, the current tax
liabilities and the deferred tax assets arising from unused tax losses
and tax credits for all entities in the group. However, the Telstra Entity
and its Australian resident wholly owned entities account for their
own current tax expense and deferred tax amounts.
Upon tax consolidation, the entities within the tax consolidated group
entered into a tax sharing agreement. The terms of this agreement
specified the methods of allocating any tax liability in the event of
default by the Telstra Entity on its group payment obligations and the
treatment where a subsidiary member exits the group. The tax
liability of the group otherwise remains with the Telstra Entity for tax
purposes.
A tax funding arrangement is also in place for entities within the tax
consolidated group under which:
• the Telstra Entity compensates its Australian resident wholly
owned controlled entities for any current tax receivable assumed;
• the Telstra Entity compensates its Australian resident wholly
owned controlled entities for any deferred tax assets relating to
unused tax losses and tax credits; and
• Australian resident wholly owned entities compensate the Telstra
Entity for any current tax payable assumed.
The funding amounts are based on the amounts recorded in the
financial statements of the wholly owned entities.
Amounts receivable of $24 million (2008: $52 million) to the Telstra
Entity and amounts payable by the Telstra Entity of $186 million
(2008: $150 million) under the tax funding arrangements are due in
the next financial year upon final settlement of the current tax
payable for the tax consolidated group.
9. Income taxes (continued)
Telstra Group Telstra Entity
As at 30 June As at 30 June
2009 2008 2009 2008
$m $m $m $m
Deferred tax assets not recognised (e):
Income tax losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 68 --
Capital tax losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158 154 130 126
Deductible temporary differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 449 463 288 268
656 685 418 394