NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONT For the three months ended 31 March 2013 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (t) Income tax and other taxes Current tax Deferred tax Tax consolidation Australian Agricultural Company Limited and its wholly-owned Australian controlled entities have formed a tax consolidated group� Income tax is  recognised on a group allocation basis under which current and deferred tax amounts for the tax consolidated group are allocated among each  entity in the tax consolidated group� The head entity, Australian Agricultural Company Limited, is liable for the current income tax liabilities of  the tax consolidated group� In addition to its own current and deferred tax amounts, Australian Agricultural Company Limited also recognises  the current tax liabilities (or assets) and the deferred tax assets 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� Details of the tax funding agreement are disclosed in note 9� 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�  Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax  liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority�  Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that  future taxable profit will allow the deferred tax asset to be recovered� The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that  sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised�  Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses,  to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of  unused tax credits and unused tax losses can be utilised, except:  Deferred income tax liabilities are recognised for all taxable temporary differences except: Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying  amounts for financial reporting purposes� Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is  realised or the liability is settled� Current income tax relating to items recognised directly in equity is recognised in equity and not in the income statement�  Current tax is calculated on accounting profit after allowing for non-taxable and non-deductible items based on the amount expected to be paid to  taxation authorities on taxable profit for the period� Our current tax is calculated using tax rates that have been enacted or substantively enacted at  the reporting date� Our income tax expense represents the sum of current tax and deferred tax� (i) Income tax When the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a  business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss�  When the taxable temporary difference is associated with investments in subsidiaries and the timing of the reversal of the temporary difference  can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future� When the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a  transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit  or loss� When the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, in which  case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future  and taxable profit will be available against which the temporary difference can be utilised� 66 Australian Agricultural Company Limited