IGO Interactive Annual Report 2020

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE 2020 Notes to the consolidated financial statements 30 June 2020 (continued) 5 Income tax (continued) (d) Reconciliation of carry forward tax losses and income tax paid 2020 $'000 2019 $'000 Tax effected balances at 30% Carry forward tax losses at the beginning of the year 154,388 180,695 Tax losses recouped from current year (62,658) (26,307) Carry forward tax losses at the end of the year 91,730 154,388 Effective income tax rate based on income tax paid -% -% (e) Deferred tax assets and liabilities Balance Sheet Profit or loss Equity Disposal of Subsidiary 2020 $'000 2019 $'000 2020 $'000 2019 $'000 2020 $'000 2019 $'000 2020 $'000 2019 $'000 Deferred tax liabilities Capitalised exploration expenditure (4,991) (2,163) 2,828 (3,319) - - - 1,567 Mine properties (121,980) (128,960) (6,980) 7,926 - - - - Property, plant and equipment (783) (1,673) (890) 1,673 - - - - Deferred gains and losses on hedging contracts (104) (145) - - (41) (452) - - Trade debtors (4,266) (2,852) 1,414 246 - - - - Consumable inventories (2,011) (1,815) 196 (90) - - - - Other (7,652) (304) 7,348 (1,277) - - - - Gross deferred tax liabilities (141,787) (137,912) 3,916 5,159 (41) (452) - 1,567 Deferred tax assets Property, plant and equipment - - - (967) - - - 1,481 Business-related capital allowances 1,441 1,831 390 1,762 - - - - Provision for employee entitlements 2,730 1,910 (820) (172) - - - - Provision for rehabilitation 19,980 18,732 (1,248) (1,701) - - - 1,349 Leased assets 237 - (237) - - - - - Carry forward tax losses 91,730 154,388 62,658 26,307 - - - - Other 3,616 3,376 (240) (1,025) - - - - Gross deferred tax assets 119,734 180,237 60,503 24,204 - - - 2,830 Net impact (22,053) 42,325 64,419 29,363 (41) (452) - 4,397 IGO Limited 9 Notes to the consolidated financial statements 30 June 2020 (continued) 5 Income tax (continued) (f) Tax losses In addition to the above recognised tax losses, the Group also has the following revenue and capital tax losses for which no deferred tax asset has been recognised: 2020 $'000 2019 $'000 Unrecognised revenue tax losses 46,775 46,775 Potential tax benefit @ 30% (2019: 30%) 14,032 14,032 Unrecognised capital tax losses 93,135 85,546 Potential tax benefit @ 30% (2019: 30%) 27,941 25,664 (g) Tax transparency code The Group has adopted the Board of Taxation's voluntary Tax Transparency Code (TTC). The TTC requires additional tax disclosures in two parts (Part A and Part B), which includes addressing the Company's approach to tax strategy and governance. The Group has addressed these Part A and Part B disclosures in this note and in its 2019 Tax Transparency Report. In relation to the year ended 30 June 2020, the Part A and Part B disclosures will be addressed in the Group's 2020 Annual Sustainability Report. (h) Recognition and measurement Current taxes The income tax expense or benefit for the period is the tax payable on the current period's taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. 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. IGO Limited 17 86 — IGO ANNUAL REPORT 2020 IGO ANNUAL REPORT 2020— 87