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4. Income tax
| Group | Group | Parent | Parent | |
| 2008 ($m) |
2007 ($m) |
2008 ($m) |
2007 ($m) | |
| Income statement | ||||
| Current income tax | 64 | 54 | (1) | (3) |
| Deferred income tax relating to temporary differences | (29) | (23) | (1) | (0) |
| Income tax expense reported in income statement | 35 | 31 | (2) | (3) |
| Statement of changes in equity | ||||
| Deferred income tax | ||||
| Net impact of change in tax rate (reduction to 30%) | 4 | (132) | 0 | (1) |
| Net change in deferred tax due to revaluation of buildings (at 33%) | (33) | 113 | (1) | (3) |
| Net change in deferred tax due to hedged financial derivatives (at 33%) | (10) | 19 | (1) | 1 |
| Income tax expense reported in equity | (39) | 0 | (2) | (3) |
The reconciliation between the income tax expense recognised in the income statement and the accounting profit before income tax less the Group's applicable income tax rate for the years ended 30 June 2007 and 2008 is as follows:
| Group | Group | Parent | Parent | |
| 2008 ($m) |
2007 ($m) |
2008 ($m) |
2007 ($m) | |
| Accounting profit before tax from continuing operations | 81 | 73 | 10 | (1) |
| Taxation at the statutory income tax rate of 33% (2007, 33%) | 27 | 24 | 3 | (0) |
| Plus tax effect of: | ||||
| Permanent differences | ||||
| Non-deductible expenses | 5 | 5 | 2 | 2 |
| Other | 0 | 0 | (7) | (5) |
| Impact of change in tax rate | 3 | 2 | 0 | 0 |
| Income tax expense reported in income statement | 35 | 31 | (2) | (3) |
Average effective income tax rate for the whole HNZC Group is 43.2% for 2008 (2007, 42.5%). The deferred tax liability movements are:
| Group | Group | Parent | Parent | |
| 2008 ($m) |
2007 ($m) |
2008 ($m) |
2007 ($m) | |
| Opening balance | 1,299 | 1,322 | 14 | 17 |
| Prior period adjustment | 1 | (1) | 0 | 0 |
| Financial derivatives (at 33%) | (10) | 22 | (1) | 1 |
| Rental property building revaluations (at 33%) | (33) | 113 | (1) | (3) |
| Impact of change in tax rate (reduction from 33% to 30%) | 7 | (130) | 0 | (1) |
| Deferred tax on temporary differences (at 33%) | (31) | (27) | (1) | 0 |
| Closing balance | 1,233 | 1,299 | 11 | 14 |
Deferred income tax as at 30 June 2008 relates to the following:
| Group | Group | Parent | Parent | |
| 2008 ($m) |
2007 ($m) |
2008 ($m) |
2007 ($m) | |
| Deferred tax liabilities | ||||
| Rental property building revaluations | 1,229 | 1289 | 17 | 19 |
| Financial derivatives | 10 | 18 | 1 | 1 |
| Other | 2 | 0 | 0 | (0) |
| Gross deferred tax liabilities | 1,241 | 1,307 | 18 | 20 |
| Deferred tax assets | ||||
| Provisions - employee entitlements | (1) | (1) | (2) | (1) |
| Provisions - other | (5) | (6) | (4) | (5) |
| HNZC Property Developments Ltd deferred expenditure | (1) | (1) | 0 | 0 |
| Management assets | (1) | (0) | (0) | (0) |
| Other | (0) | (0) | (1) | 0 |
| Gross deferred tax assets | (8) | (8) | (7) | (6) |
| Net deferred tax liability | 1,233 | 1,299 | 11 | 14 |
