2007 Financial statements

Note 18 - Deferred taxation

	2007 US$m	2006 US$m
At 1 January	2,114	2,142
Adjustment on currency translation	278	97
Deferred tax of acquired companies	3,954	-
Credited to the income statement	(203)	(54)
Credited to SORIE (a)	(203)	(94)
Other movements (b)	(39)	23
At 31 December	5,901	2,114
Comprising:
- deferred tax liabilities (c)	6,486	2,339
- deferred tax assets (c)	(585)	(225)

Deferred tax balances for which there is a right of offset within the same jurisdiction are presented net on the face of the balance sheet, as permitted by IAS12. The closing deferred tax liabilities and assets, prior to this offsetting of balances, are shown below.

	UK tax US$m	Australian tax US$m	Other countries' tax US$m	2007 Total US$m	2006 Total US$m
Deferred tax liabilities arising from:
Accelerated capital allowances	96	1,986	6,479	8,561	3,181
Post retirement benefits	118	3	4	125	94
Unremitted earnings	-	-	330	330	226
Other temporary differences	3	275	318	596	121
	217	2,264	7,131	9,612	3,622
Deferred tax assets arising from:
Capital allowances	-	-	-	-	(100)
Provisions	(112)	(542)	(1,141)	(1,795)	(735)
Post retirement benefits	(76)	(2)	(861)	(939)	(285)
Tax losses	(162)	-	(706)	(868)	(301)
Other temporary differences	-	(109)	-	(109)	(87)
	(350)	(653)	(2,708)	(3,711)	(1,508)
(Credited)/charged to the income statement
(Decelerated)/accelerated capital allowances	9	165	(266)	(92)	280
Provisions	(7)	(192)	(20)	(219)	(5)
Post retirement benefits	1	(1)	59	59	16
Tax losses	(148)	-	43	(105)	(280)
Tax on unremitted earnings	-	-	34	34	(2)
Other temporary differences	(5)	10	115	120	(63)
	(150)	(18)	(35)	(203)	(54)


Notes	Expand
The amounts credited directly to the SORIE relate to tax relief on share options, provisions for tax on exchange differences on intra group loans qualifying for reporting as part of the net investment in subsidiaries, on cash flow hedges and on actuarial gains and losses on pension schemes and post retirement healthcare plans. 'Other movements' include deferred tax recognised by subsidiary holding companies that is presented in these accounts as part of the tax charge on the profits of the equity accounted unit to which it relates. The deferred tax liability of US$6,486 million (2006: US$2,339 million) includes US$6,238 million (2006: US$1,764 million) due in more than one year. The deferred tax asset of US$585 million (2006: US$225 million) includes US$240 million (2006: US$139 million) receivable in more than one year. US$1,360 million (2006: US$763 million) of potential deferred tax assets have not been recognised as an asset in these accounts. There is no time limit for the recovery of these potential assets, the majority of which relate to capital losses, recovery of which depends on realisation of capital gains in future years. Deferred tax is not recognised on the unremitted earnings of overseas subsidiaries and jointly controlled entities where the Group is able to control the timing of the remittance and it is probable that there will be no remittance in the foreseeable future. If these earnings were remitted, tax of US$1,921 million (2006: US$1,711 million) would be payable. There is a limited time period for the recovery of US$62 million (2006: nil) of tax losses which have been recognised as deferred tax assets in the accounts.