Woodside Petroleum Ltd|Financial Statements 111
Restated
USm USm
(e) Deferred tax balance sheet reconciliation (cont.)
Deferred tax liabilities
PRRT
Production and growth assets
Augmentation for current year () ()
Provisions () ()
Other ()
Income tax
Oil and gas properties
Exploration and evaluation assets
Provisions () ()
PRRT liabilities
Unused tax losses and tax credits () ()
Other() ()
(f) Tax payable reconciliation
Income tax payable () ()
() ()
(g) Eective income tax rate: Australian and global
operations
Eectiveincometaxrate
Australia
Global
(h) Current year income tax expense reconciliation
Profit before income tax
Income tax at the statutory tax rate of 30%
Non-temporarydierences
Temporarydierencesdeferredtax() ()
Current year income tax expense
1. US$4 million (2017: US$8 million) movement recognised in other comprehensive
income.
2. The global operations eective income tax rate (ETR) is calculated as the Group’s
income tax expense divided by profit before income tax. The Australian operations
ETR is calculated with reference to all Australian companies and excludes foreign
exchange impact on tax expense.
3. Primarily expenditure in respect of foreign operations. Excludes foreign exchange
impact on tax expense.
4. Excludes adjustment to prior years.
Tax transparency code
Woodside participates in the Australian Board of Taxation’s
voluntary Tax Transparency Code (TTC). To increase public
confidence in the contributions and compliance of corporate
taxpayers, the TTC recommends public disclosure of tax
information. Woodside has addressed the recommended
disclosures in two parts. The Part A disclosures are addressed
within this Taxes note; the Part B disclosures are addressed in our
Sustainable Development Report.
Recognition and measurement
Current tax assets and liabilities are measured at the amount
expected to be recovered from or paid to the taxation authorities.
Deferred tax assets and liabilities are measured at the tax rates that
are expected to apply in the period in which the liability is settled or
the asset is realised. The tax rates and laws used to determine the
amount are based on those that have been enacted or substantially
enacted by the end of the reporting period. Income taxes relating to
items recognised directly in equity are recognised in equity.
Current taxes
Current tax expense is the expected tax payable on the taxable
income for the year and any adjustment to tax payable in respect
of previous years.
Key estimates and judgements
(a) Income tax classification
Judgement is required when determining whether a particular tax is
an income tax or another type of tax. Accounting for deferred tax is
applied to income taxes as described above, but is not applied to other
types of taxes, e.g. North West Shelf royalties and excise. Such taxes are
recognised in the income statement on an appropriate basis. PRRT is
considered, for accounting purposes, to be an income tax.
(b) Deferred tax asset recognition
Australian tax losses: A deferred tax asset of US$73 million
(2017: US$169 million) has been recognised from carry forward unused
tax losses and credits. The Group has determined that it is probable that
sucient future taxable income will be available to utilise those losses
and credits.
Foreign tax losses: Deferred tax assets of US$399 million
(2017: US$403 million) relating to unused foreign tax losses have not
been recognised on the basis that it is not probable that the assets will be
utilised based on current planned activities in those regions.
PRRT: Certain deferred tax assets on deductible temporary dierences
have not been recognised on the basis that deductions from future
augmentation of the deductible temporary dierence will be sucient
to oset future taxable profit. US$3,792 million (2017: US$3,722 million)
relates to the North West Shelf Project, US$589 million (2017: US$501
million) relates to the quarantined exploration spend of the Pluto Project
and US$767 million (2017: US$680 million) relates to the Wheatstone
Project. Future taxable profits were determined using a long-term bond
rate of 2.8% (2017: 2.5%) for the purposes of augmentation.
Had an alternative approach been used to assess recovery of the
deferred tax assets, whereby future augmentation was not included in
the assessment, the additional deferred tax assets would be recognised,
with a corresponding benefit to income tax expense. It was determined
that the approach adopted provides the most meaningful information
on the implications of the PRRT regime, whilst ensuring compliance with
AASB 112 Income Taxes.
NOTES TO THE FINANCIAL STATEMENTS A. EARNINGS FOR THE YEAR
for the year ended 31 December 2018
A.5 Taxes (cont.) Deferred taxes
Deferred tax expense is the movements in the temporary
dierences between the carrying amount of an asset or liability in
the statement of financial position and its tax base.
With the exception of those noted below, deferred tax liabilities
are recognised for all taxable temporary dierences. Deferred
tax assets are recognised for deductible temporary dierences,
unused tax losses and tax credits only if it is probable that sucient
future taxable income will be available to utilise those temporary
dierences and losses.
Deferred tax is not recognised if the temporary dierence arises
from goodwill or from the initial recognition (other than in a
business combination) of assets and liabilities in a transaction that
aects neither accounting profit nor the taxable profit.
In relation to PRRT, the impact of future augmentation on
expenditure is included in the determination of future taxable
profits when assessing the extent to which a deferred tax asset can
be recognised in the statement of financial position.
Osetting deferred tax balances
Deferred tax assets and liabilities are oset only if there is a legally
enforceable right to oset current tax assets and liabilities and
when they relate to income taxes levied by the same taxation
authority on either the same taxable entity or dierent taxable
entities that the Group intends to settle its current tax assets and
liabilities on a net basis. Refer to Notes E.9 and E.10 for detail on
the tax consolidated group.