IGO Annual Report 2016

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2016

Annual Report 2016 75

Notes to the consolidated financial statements

30 June 2016

(continued)

5 Income tax (continued)

(g) Recognition and measurement (continued)

Current taxes (continued)

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of

the reporting period in the countries where the Company's subsidiaries and associates operate and generate taxable

income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable

tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected

to be paid to the tax authorities.

Deferred taxes

Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of assets and

liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax

bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred

tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not

accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination

that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined

using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are

expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise those

temporary differences and losses.

Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax

bases of investments in foreign operations where the company is able to control the timing of the reversal of the

temporary differences and it is probable that the differences will not reverse in the foreseeable future.

Offsetting deferred tax balances

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and

liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities

are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to

realise the asset and settle the liability simultaneously.

(h) Significant estimates

The Group is subject to income taxes in Australia and jurisdictions where it has foreign operations. Significant

judgement is required in determining deferred tax assets and liabilities. There are many transactions and calculations

during the ordinary course of business for which the ultimate tax determination is uncertain.

In addition, deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is

probably that future forecast taxable profits are available to utilise those temporary differences and losses, and the tax

losses continue to be available having regard to the relevant tax legislation associated with their recoupment.

The Australian consolidated tax group has recognised a deferred tax asset relating to carry forward tax losses of

$166,506,000 at 30 June 2016 (2015: $92,958,000). The utilisation of this deferred tax asset amount depends upon

future taxable amounts in excess of profits arising from the reversal of temporary differences. The Group believes this

amount to be recoverable based on taxable income projections.

Independence Group NL