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Income tax expense

2009 $’000

2008 $’000

2009 $’000

The major components of income tax expense are: Current income tax Current income tax charge Adjustment for prior periods Deferred income tax Current year temporary differences Adjustment for prior periods

119 793

934 (439)

(5,343) (778)

3,725

Income tax (credit) / expense reported in the Income Statement

(5,209)

4,220

Notes to the Financial Statements

For the year ended 30 June 2009

Parent 2008 $’000

9. INCOME TAX

Consolidated

(17,932)

15,451

6,000

7,000

(5,380)

4,635

1,800

2,100

15

(439)

156

24

(1,800)

(2,100)

4,220

Numerical reconciliation between aggregate tax expense recognised in the Income Statement and tax expense calculated per the statutory income tax rate:

Accounting profit / (loss) before income tax Tax at Australian income tax rate of 30% (2008 – 30%) Adjustment for prior periods Other non-deductible items and variations

Income tax (credit) / expense reported in the Income Statement

(5,209)

Tax losses

The Consolidated Entity has capital tax losses of $1,013,526 (2008: $1,013,526) for which no deferred tax asset has been recognised. These are available indefinitely for offset against future capital gains subject to satisfaction of the relevant statutory tests.

Tax consolidation

AVJennings Limited and its wholly-owned resident entities have formed a tax consolidated group with effect from 1 July 2002 and are therefore taxed as a single entity from that date. The accounting policy in relation to tax consolidation is set out in note 2(s).

The Head Entity, AVJennings Limited, has entered into an agreement with its wholly-owned subsidiary, AVJennings Properties

Limited, under which AVJennings Properties Limited will account for the current and deferred tax amounts of the controlled entities in the Tax Consolidated Group. The Group has applied the group allocation approach in determining the appropriate amount of current taxes and deferred taxes to allocate to members of the Tax Consolidated Group.

Nature of tax funding arrangements and tax sharing agreements

Entities within the Tax Consolidated Group have entered into a tax funding arrangement and a tax sharing agreement with the Head Entity. Under the terms of the Tax Funding Arrangement, each of the entities in the Tax Consolidated Group has agreed to

pay or receive a tax equivalent payment to or from the Head Entity, based on the current tax liability or current tax asset of the

entity. Such amounts are reflected in amounts receivable from or payable to other entities in the Tax Consolidated Group.

The Tax Sharing Agreement entered into between members of the Tax Consolidated Group provides for the determination of the allocation of income tax liabilities between the entities should the Head Entity default on its tax payment obligations or if an entity should leave the Tax Consolidated Group. The effect of the tax sharing agreement is that each member’s liability for tax payable by the Tax Consolidated Group is limited to the amount payable to the Head Entity under the Tax Funding Arrangement.

48 AVJennings Limited ABN 44 004 327 771

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