## (e) Foreign Currency Transactions and Balances 

## Functional and Presentation Currency 

Items included in the financial statements of each of the Group’s subsidiaries are measured using the currency of the primary economic environment in which the subsidiary or branch operates (the ‘functional currency’). The financial statements are presented in Australian dollars, which is the Company’s functional and presentation currency. 

## Transactions and Balances 

Foreign currency transactions are translated into the functional currency using the foreign exchange rates prevailing at the dates of the transactions. Foreign currency gains and losses resulting from the settlement of such transactions and from the translation at financial year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the consolidated statement of comprehensive income. 

Non-monetary items measured at historical cost continue to be carried at the foreign exchange rate at the date of transaction. 

Foreign exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity, otherwise foreign exchange differences are recognised in the consolidated statement of comprehensive income. 

## Group Companies 

The results and financial position of foreign subsidiaries that have a functional currency different from the presentation currency are translated into the presentation currency as follows: 

• assets and liabilities are translated at end of reporting period foreign exchange rates prevailing at the end of each reporting period; 

• income and expenses are translated at average foreign exchange rates for the financial period; and 

• all resulting foreign exchange differences are recognised in other comprehensive income. 

On consolidation, foreign exchange differences arising on translation of foreign subsidiary financial statements are transferred directly to the foreign currency translation reserve in the consolidated statement of financial position. The relevant differences are recognised in the consolidated statement of comprehensive income during the financial period when the investment in a foreign subsidiary is disposed. 

## (f) Income Taxes and Other Taxes 

## Current Tax 

Current income tax expense is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit or loss for the financial period. It is calculated using tax rates that have been enacted or are substantively enacted by the end of each reporting period. Current tax for current and prior financial periods is recognised as a liability (or asset) to the extent that it is unpaid or (refundable). 

## Deferred Tax 

Deferred tax is accounted for using the statement of financial position liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. The tax base of an asset or liability is the amount attributed to that asset or liability for income taxation purposes. 

No deferred tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. 

Deferred tax is calculated at the tax rates that are expected to apply to the financial period when the asset is realised or liability is settled. Deferred tax is credited in the consolidated statement of comprehensive income except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity. 

