NOTE 01
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
their fair value and initially credited to deferred
income upon receipt, then recognised in the
consolidated income statement over the
period necessary to match them with the
costs that they are intended to compensate.
Where those grants relate to expenditure
that is to be capitalised, they are credited
to the consolidated income statement
on a straight line basis over the expected
lives of the related assets from the date of
commissioning. Grants that compensate the
Group for expenses incurred are recognised in
the income statement on a systematic basis in
the periods in which expenses are recognised.
(m) Infrastructure
maintenance
Infrastructure maintenance of infrastructure
assets is classified as major periodic maintenance
if it is part of a systematic planned program
of works, occurs on a cyclical basis and is
significant in monetary value. Major periodic
maintenance may include significant corrective
works, component replacement programs, and
similar activities and these costs are expensed.
(n) Income tax
Current tax assets and liabilities for the
current and prior periods are measured at
the amount expected to be recovered from
or paid to the taxation authorities based
on the current period’s taxable income and
any adjustments in respect of prior years.
The tax rates and tax laws used to compute
the amount are those that are enacted or
substantively enacted by the reporting date.
Deferred tax liabilities (DTLs) are recognised
for all taxable temporary differences between
the carrying amount of assets and liabilities for
financial reporting and the amounts used for
taxation purposes.
Deferred tax assets (DTAs) are recognised
for all deductible temporary differences, carry
forward of unused tax offsets and unused tax
losses, to the extent that it is probable that
taxable profit will be available against which
the deductible temporary differences and the
unused tax offsets and losses can be utilised.
Division 58 of the Income Tax Assessment Act
1997 (“Division 58”), has entitled the Group
to value certain assets, for taxation purposes,
using pre-existing audited book values or the
notional written down values of the assets as
appropriate. This effectively means the tax
depreciable value of these rail infrastructure
and related assets significantly exceeds the
carrying value. Accordingly, Division 58 results
in significant deductible temporary differences
and potential DTAs. The carrying amount of
DTAs is reviewed at each reporting date and
adjusted to the extent that it is probable that
sufficient taxable profit will be available to
allow the deferred tax asset to be utilised.
DTAs and DTLs are measured at the tax rates
that are expected to apply in the year when
the asset is realised or the liability is settled,
based on tax rates (and tax laws) that have
been enacted or substantively enacted at the
reporting date. DTAs and DTLs are offset only
if a legally enforceable right exists to set off
current tax assets against current tax liabilities
and the DTAs and DTLs relate to the same
taxable entity and the same taxation authority.
Tax consolidation legislation
Australian Rail Track Corporation Ltd and its
wholly owned Australian controlled entities
consolidated for income tax purposes as of 1
July 2003.
The head entity, Australian Rail Track
Corporation Ltd and the controlled entities in
the income tax consolidated group continue
to account for their own current and deferred
tax amounts. The Group has applied the
stand alone taxpayer approach, consistent
with the requirements of Interpretation 1052,
in determining the appropriate amount of
current taxes and deferred taxes to allocate
to members of the income tax consolidated
group. In addition to its own current and
deferred tax amounts, Australian Rail Track
Corporation Ltd also recognises the current
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