HSBC 2006 Annual Report Download - page 379

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31 Provisions
Total provisions at 31 December 2006 were US$2,859 million (2005: US$1,966 million), of which US$1,096 million
(2005: US$530 million) relates to deferred tax and US$1,763 million (2005: US$1,436 million) relates to other
provisions.
Deferred taxation
HSBC
2006 2005
Total
Deferred
tax asset
Deferred
tax liability Total
Deferred
tax asset
Deferred
tax liability
US$m US$m US$m US$m US$m US$m
Temporary differences:
– retirement benefits ....................................... 1,599 169 1,430 1,621 1,537 84
– loan impairment allowances ........................ 2,775 2,607 168 2,220 1,899 321
– assets leased to customers ........................... (1,676) (82) (1,594) (1,342) (1,250) (92)
– revaluation of property ................................ (469) (166) (303) (339) 61 (400)
– accelerated capital allowances .................... (80) 91 (171) (55) (5) (50)
– other short-term timing differences ............. (71) 657 (728) (107) 247 (354)
Unused tax losses ............................................... 180 59 121 223 176 47
Provision for tax on profit remitted from
overseas .......................................................... (112) (93) (19) (86) – (86)
2,146 3,242 (1,096) 2,135 2,665 (530)
The amount of temporary differences for which no deferred tax asset is recognised in the balance sheet is
US$1,067 million (2005: US$835 million). Of this amount, US$876 million (2005: US$458 million) has no expiry
date and US$191 million (2005: US$377 million) is scheduled to expire within 10 years.
HSBC Holdings
Deferred tax asset/(liability)
2006 2005
US$m US$m
Temporary differences:
– short-term timing differences ....................................................................................................... 1 (5)
– fair valued assets and liabilities ................................................................................................... 10 –
– share-based payments ................................................................................................................... 24 –
Provision for tax on profit remitted from overseas ............................................................................. – (65)
35 (70)
The deferred tax asset at 31 December 2006 is included within ‘Other assets’ on the balance sheet.
Deferred tax is not recognised on temporary differences associated with investments in subsidiaries and branches
because earnings are intended to be indefinitely reinvested in the case of subsidiaries and no further tax is expected to
arise in the foreseeable future in the case of branches. The total of such relevant temporary differences amounted to
US$22,424 million (2005: US$15,367 million).
There are no deductible temporary differences, unused tax losses and unused tax credits for which no deferred tax
asset is recognised in the balance sheet.
Other provisions
2006 2005
US$m US$m
At 1 January ....................................................................................................................................... 1,436 2,636
IFRSs transition adjustment at 1 January 20051 ................................................................................ – (1,033)
Additional provisions/increase in provisions2 ................................................................................... 652 637
Acquisition of subsidiaries ................................................................................................................ 54 –
Provisions utilised ............................................................................................................................. (379) (327)
Amounts reversed .............................................................................................................................. (154) (310)
Exchange differences and other movements ..................................................................................... 154 (167)
At 31 December ................................................................................................................................. 1,763 1,436