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ANNUAL REPORT 2014
3 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.12 Finance income and finance expense
Finance income comprises interest income on funds invested, net foreign currency gains and gains on
hedging instruments that are recognised in the statement of total return or statement of comprehensive
income (as the case may be). Interest income is recognised as it accrues, using the effective interest method.
Finance expense comprises interest expense on borrowings, unwinding of the discount on non-current rental
deposits, net foreign currency losses and losses on hedging instruments that are recognised in the statement
of total return or statement of comprehensive income (as the case may be). All borrowing costs are recognised
in the statement of total return or statement of comprehensive income (as the case may be) using the effective
interest method.
Foreign currency gains and losses are reported on a net basis.
3.13 Tax
Tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in the statement
of total return except to the extent that it relates to a business combination, or items recognised directly in
other comprehensive income or unitholders’ funds.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised using the statement of financial position method, providing for temporary
differences between the carrying amounts of assets and liabilities for financial reporting purposes and the
amounts used for taxation purposes. Deferred tax is not recognised for the temporary differences arising from
the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects
neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that
it is probable that they will not reverse in the foreseeable future.
Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when
they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities
and assets and they relate to income taxes levied by the same tax authority on the same taxable entity.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be
available against which the unused tax losses and credits and temporary differences can be utilised. Deferred
tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
In the ordinary course of business, there are many transactions and calculations for which the ultimate tax
treatment is uncertain. Therefore, the Stapled Group recognises tax liabilities based on estimates of whether
additional taxes and interest will be due. These tax liabilities are recognised when the Stapled Group believes
that certain positions may not be fully sustained upon review by tax authorities, despite the Stapled Group’s
belief that its tax return positions are supportable. The Stapled Group believe that its accruals for tax liabilities
are adequate for all open tax years based on its assessment of many factors including interpretations of tax
law and prior experience. This assessment relies on estimates and assumptions and may involve a series
of multifaceted judgements about future events. New information may become available that causes the
Stapled Group to change its judgement regarding the adequacy of existing tax liabilities, such changes to tax
liabilities will impact tax expense in the period that such a determination is made.
NOTES TO THE FINANCIAL STATEMENTS
