Select two public limited companies listed on the Australian Securities Exchange (ASX) that
Requirements
Select two public limited companies listed on the Australian Securities Exchange (ASX) that
are in the same industry. Go to the websites of your selected companies. Then go to the Investor
Relations section of each companys website. This section may be called, Investors,
Shareholder Information or a similar name.
In this section, download the latest annual reports for the years 2018-2019, 2019-2020, and
2020-2021. Do not use the companies interim financial statements or their concise financial
statements.
Please read the financial statements (balance sheet, income statement, statement of changes in
owners equity, cash flow statement) and the relevant footnotes of your selected companies
financial statements carefully. Use the information in the financial statements of your selected
companies to prepare a report to address the following questions:
a) What are the tax expenses shown in the latest financial statements of the two selected
companies?
b) Calculate the effective tax rates for the two selected companies. The effective tax rate is
calculated as (income tax expense/earnings before tax). Which company has the higher
effective tax rate?
c) Comment on deferred tax assets/liabilities that are reported in the balance sheet articulating
the possible reasons why they have been recorded.
d) Was there any increase or decrease in deferred tax assets or deferred tax liabilities reported
by each of your selected companies?
e) Calculate the cash tax amount for both companies using the accounting tax amount (the tax
expense based on the accounting standards), changes in deferred tax assets, and changes in
deferred tax liabilities.
f) Calculate the cash tax rate for both companies. Which company has higher cash tax rate?
(Please do your own research to familiarise yourself with how to calculate cash tax rate).
g) Why is the cash tax rate different from the accounting tax rate?
Please note that some aspects of companies treatment of tax can be very complicated. It is
expected that you will do your own research in the area and use your findings to support your
answers. When an external information source is used, it is essential for you to cite the source
in in-text citation and include the source in your reference list.
Report Structure
The report should consist of the following components:
1) Introduction A brief description of the selected companies and an overview of what you
discussed in this report.
2) Main Body The main body should address the requirements for each case company
separately.
3) Conclusion No recommendation is needed.
4) Reference List All references cited in the main body must be included in the reference
list. References from Wikipedia should not be used.
