Singapore Airlines 2005 Annual Report Download - page 82

80 SIA Annual Report 04/05
Notes to the Financial Statements
31 March 2005
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10 Taxation (in $ million)
The Group
2004-05 2003-04
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Current taxation
Provision for the year 146.6 165.6
Over provision in respect of prior years (85.8) (165.4)
Share of joint venture companies’ taxation:
– provision for the year 0.4 0.3
Share of associated companies’ taxation:
– provision for the year 21.2 12.1
Reversal of tax contingency provision no longer required – (21.2)
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82.4 (8.6)
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Deferred taxation
Provision/(write-back) for the year 190.9 (5.2)
Under provision in respect of prior years 83.9 134.2
Share of associated companies’ taxation:
– provision for the year 25.8 5.2
– under provision in respect of prior years 4.3 4.7
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304.9 138.9
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387.3 130.3
Adjustment for reduction in Singapore statutory tax rate – (204.7)
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387.3 (74.4)
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The Group has tax losses of approximately $17.4 million (2004: $17.2 million), unabsorbed capital allowances of
$0.6 million (2004: $0.6 million) and other deductible temporary differences of $3.0 million (2004: $ nil) that are
available for offset against future taxable profits of the companies in which no deferred tax assets are recognised due
to uncertainty of the recoverability. The use of the tax losses and unabsorbed capital allowances are subject to the
agreement of the tax authorities and compliance with certain provisions of the tax legislation of the respective countries
in which the companies operate.
On 27 February 2004, the Government announced a 2% points cut in statutory tax rate from Year of Assessment 2005.
The financial effect of the reduction in tax rate was reflected in 2003-04 accounts. The aggregate adjustment of the
prior year’s deferred tax liabilities was $204.7 million for the Group.
In 2003-04, SIA Engineering Company Limited (“SIAEC”) reversed a tax contingency provision amounting to $21.2
million. The provision was made to cover for potential tax liability that might arise at the time when SIAEC disposed off
certain fixed assets from its Engine Overhaul Division to Eagle Services Asia Private Limited (“ESA”) and the subsequent
divestment of 51% interest in ESA to Pratt & Whitney. Following the closure of this matter in 2003-04, the provision was
no longer required.
A reconciliation between taxation expense and the product of accounting profit multiplied by the applicable tax rate for
the years ended 31 March is as follows:
The Group
2004-05 2003-04
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Profit before taxation 1,829.4 820.9
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Taxation at statutory tax rate of 20.0% 365.9 164.2
Adjustments
Income not subject to tax (27.8) (13.6)
Expenses not deductible for tax purposes 29.8 27.8
Higher effective tax rates of other countries 18.4 6.2
Under/(over) provision in respect of prior years, net 2.4 (26.5)
Effect of change in statutory tax rate – (204.7)
Reversal of tax contingency provision no longer required – (21.2)
Income under an incentive scheme (4.8) (7.3)
Others 3.4 0.7
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Taxation 387.3 (74.4)
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