that it has become probable that future taxable
profit will allow the DTA to be recovered.
DTAs and DTLs are measured at the tax rates that
are expected to apply to 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
implemented the tax consolidation legislation as
of 1 July 2003.
The head entity, Australian Rail Track Corporation
Ltd and the controlled entities in the tax consolidat-
ed group continue to account for their own current
and deferred tax amounts. The Group has applied
the group allocation approach in determining the
appropriate amount of current taxes and deferred
taxes to allocate tomembers of the tax consolidated
group. In addition to its own current and deferred
tax amounts, Australian Rail Track Corporation Ltd
also recognises the current tax liabilities (or assets)
and the DTAs arising from unused tax losses and
unused tax credits assumed from controlled entities
in the tax consolidated group.
Assets or liabilities arising under tax funding
agreements with the tax consolidated entities are
recognised as amounts receivable from or payable
to other entities in the Group.
Any difference between the amounts assumed
and amounts receivable or payable under
the tax funding agreement are recognised
as a contribution to (or distribution from)
wholly‑owned tax consolidated entities.
(i) Leases
Group as a lessee
Leases of property, plant and equipment where
the Group, as lessee has substantially all the risks
and benefits incident to ownership of the leased
item are classified as finance leases. Finance
leases are capitalised at the lease’s inception at
the fair value of the leased property or, if lower, the
present value of the minimum lease payments.
The corresponding rental obligations, net of
finance charges, are included in other short‑term
and long‑term payables. Each lease payment is
allocated between the liability and finance cost.
The finance cost is charged to the Consolidated
Income Statement over the lease period so as to
produce a constant periodic rate of interest on the
remaining balance of the liability for each period.
The property, plant and equipment acquired under
finance leases are depreciated over the shorter of
the asset’s useful life and the lease term.
Leases in which a significant portion of the risks
and rewards of ownership are not transferred to
the Group as lessee are classified as operating
leases (note 35). Payments made under operating
leases (net of any incentives received from the
lessor) are charged to the Consolidated Income
Statement on a straight‑line basis over the period
of the lease.
Group as a lessor
Leases in which the Group retains substantially all
the risks and benefits of ownership of the leased
asset are classified as operating leases. Initial
direct costs incurred in negotiating an operating
lease are added to the carrying amount of the
leased asset and recognised as an expense over the
lease term on the same basis as rental income.
(j) Impairment of assets
Assets are reviewed for impairment whenever
events or changes in circumstances indicate that
the carrying amount may not be recoverable. An
impairment loss is recognised for the amount by
which the asset’s carrying amount exceeds its
recoverable amount. The recoverable amount
is the higher of an asset’s fair value less costs
to sell and value in use. For the purposes of
assessing impairment, assets are grouped at
the lowest levels for which there are separately
Note 01
Summary of significant accounting policies (continued)
63
