– whether evidence exists clearly demonstrating that the  distribution is a return of capital originally invested by  the investor (e.g. the timing of a distribution relative to  the acquisition of the investment);  – the substance of the payment, including the existence  of non-discretionary evidence, that may identify its  nature. A director declaration of the nature is given  a low weighting in the analysis;  – whether other transactions occur with the same  counterparty at the same time as, or in contemplation of,  the payment;  – whether the payment is from profits in proportion to the  investors’ particular class of capital;  – when a dividend is paid in the form of additional equity of  the investee, whether all investors retain the same relative  ownership interest in the investee;  – whether the criteria for derecognising part, or all, of an  investment in a financial asset under AASB139 Financial  Instruments: Recognition and Measurementare met, and  in particular if substantially all the risks and rewards of  ownership have been transferred; and  – the basis for the amendment in May 2008 to the ‘cost  method’ description in AASB 127 Consolidated and  SeparateFinancial Statementsso as to remove an  approach solely relying upon determining post- acquisition retained earnings.  (vii) Income tax  Tax consolidation  (viii) Cash collateral on securities borrowed/lent and  reverse repurchase/repurchase agreements  The income tax expense for the financial year is the tax payable  on the current period’s taxable income based on the national  income tax rate for each jurisdiction, adjusted for changes in  deferred tax assets and liabilities and unused tax losses.  Deferred tax assets are recognised when temporary differences  arise between the tax bases of assets and liabilities and their  respective carrying amounts which give rise to a future tax  benefit, or when a benefit arises due to unused tax losses.  In both cases, deferred tax assets are recognised only to the  extent that it is probable that future taxable amounts will be  available to utilise those temporary differences or tax losses.  Deferred tax liabilities are recognised when such temporary  differences will give rise to taxable amounts that are payable  in future periods. Deferred tax assets and liabilities are  recognised at the tax rates expected to apply when the  assets are recovered or the liabilities are settled under  currently enacted tax law. Deferred tax assets and liabilities are offset when there is  a legally enforceable right to offset current tax assets and  liabilities and when the deferred tax balances relate to the  same taxation authority. Current tax assets and liabilities are  offset when there is a legally enforceable right to offset and an  intention to either settle on a net basis, or realise the asset and  settle the liability simultaneously. Current and deferred taxes  attributable to amounts recognised directly in equity are also  recognised directly in equity. The Company and Consolidated Entity exercise judgement in  determining whether deferred tax assets, particularly in relation  to tax losses, are probable of recovery. Factors considered  include the ability to offset tax losses within the tax consolidated  group in Australia or groups of entities in overseas jurisdictions,  the nature of the tax loss, the length of time that tax losses are  eligible for carry forward to offset against future taxable profits  and whether future taxable profits are expected to be sufficient  to allow recovery of deferred tax assets. The Consolidated Entity undertakes transactions in the ordinary  course of business where the income tax treatment requires the  exercise of judgement. The Consolidated Entity estimates its tax  liability based on its understanding of the tax law.  The Consolidated Entity’s Australian tax liabilities are  determined according to tax consolidation legislation.  The Company together with all eligible Australian resident  wholly-owned subsidiaries of the Company comprise a tax  consolidated group with the Company as the head entity. As a  consequence, the relevant subsidiaries are not liable to make  income tax payments and do not recognise any current tax  balances or any deferred tax assets arising from unused tax  losses. Under the terms and conditions of a tax funding  agreement, the Company charges each subsidiary for all  current tax liabilities incurred in respect of their activities and  reimburses each subsidiary for any tax assets arising from  unused tax losses.  Should the Company be in default of its tax payment  obligations, or a default is probable, the current tax balances of  the subsidiaries will be determined in accordance with the  terms and conditions of a tax sharing agreement between the  Company and entities in the tax consolidated group.  As part of its trading activities, the Consolidated Entity borrows  and lends securities on a collateralised basis. The securities  subject to the borrowing or lending are not derecognised  from the statements of financial position of the relevant parties,  as the risks and rewards of ownership remain with the initial  holder. Where cash is provided as collateral, the cash paid to  third parties on securities borrowed is recorded as a receivable,  while cash received from third parties on securities lent is  recorded as a borrowing.  Reverse repurchase transactions, where the Consolidated  Entity purchases securities under an agreement to resell,  and repurchase transactions, where the Consolidated Entity  sells securities under an agreement to repurchase, are also  conducted on a collateralised basis. The securities subject to  the reverse repurchase and repurchase agreements are not  derecognised from the statements of financial position of the  relevant parties, as the risks and rewards of ownership remain  with the initial holder. Where cash is provided as collateral, the  cash paid to third parties on the reverse repurchase agreement  is recorded as a receivable, while cash received from third  parties on the repurchase agreement is recorded as a  borrowing. Cash provided as collateral on securities borrowed or on the  reverse repurchase agreement is included in receivables from  financial institution or other assets based on the counterparty,  while cash received from third parties on securities lent or  repurchase agreement is included in payables to financial  institutions or other liabilities based on the counterparty.  The Consolidated Entity continually reviews the fair values of  the securities on which the above transactions are based and,  where appropriate, requests or provides additional collateral to  support the transactions, in accordance with the underlying  agreements.  107 