Carmen and I were going through the last year’s financial statements (year ended 30 June 2014) and

I discovered that the income tax expense account was significantly higher than the income tax the

company actually paid to the ATO as per the cash book. Is there some reason as to why we did not

pay the full amount shown as an expense to the Tax Department? Or has the income tax expense

been calculated incorrectly? If so how do we adjust this?

I also noticed that last year’s Statement of Financial Position (as at 30 June 2014) showed a Deferred

Tax Asset and Deferred Tax Liability which we have never had in our accounts before. Carmen tells

me it is because we became a public company during this year, but this doesn’t make sense at all.

How can becoming a public company cause a change in tax? Could you please explain this in your

response, giving examples to make it very clear to us. I also noticed that the current tax liability in the

projected Statement of Financial Position as at 31 December 2014 is very much less than what we

have estimated as income tax expense for the six month period? How is this possible? 

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