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## Notes to the Financial Statements (continued) 

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## 4. Income Tax 

## Income Tax Expense 

The difference between income tax expense provided in the financial statements and the prima facie income tax is reconciled as follows: 

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This future income tax benefit will only be obtained if: 

(a) future assessable income is derived of a nature and of an amount sufficient to enable the benefit to be realised; 

(b) the conditions for deductibility imposed by tax legislation continue to be complied with; and 

(c) no changes in tax legislation adversely affect the consolidated entity in realising the benefit. 

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## Tax Consolidation 

Effective 1 July 2002, for the purposes of income taxation, Harvey Norman Holdings Limited and its 100% owned subsidiaries have formed a tax consolidated group. The transitional method of existing tax values will be adopted in determining the tax cost of assets owned by entities forming part of the consolidated group. At balance date, there has been no material effect on the future income tax benefit of $7.9 million and the provision for income tax of $26.0 million. Harvey Norman Holdings Limited has not formally notified the Australian Taxation Office of its adoption of the tax consolidation regime. 

