Deferred tax assets and deferred tax liaDeferred tax assets and deferred tax liabilities

Deferred tax assets and deferred tax liabilities

1. Subject to paragraphs 11, 12 and 13 of this Attachment, a private health insurer must deduct deferred tax assets net of deferred tax liabilities.[14]
2. The netting of these items must be on a consistent basis. Where deferred tax liabilities exceed deferred tax assets, the excess of deferred tax liabilities must not be added to Common Equity Tier 1 Capital (i.e. the net deduction is zero). Deferred tax assets and liabilities include any tax effects that would result from the accounts receivables and accounts payables adjustment outlined in paragraph 7 of this Attachment and the technical provisions in surplus or deficit of HPS 340 liabilities outlined in paragraph 32(f) of this Prudential Standard.
3. The netting of deferred tax assets and deferred tax liabilities must only be applied where the private health insurer has a legally enforceable right to set-off current tax assets against current tax liabilities where they relate to income taxes levied by the same taxation authority and the taxation authority permits the private health insurer to make or receive a single net payment.
4. The deferred tax liabilities and deferred tax assets that may be netted must exclude amounts that have been used to adjust:
   1. goodwill and intangible assets; and
   2. defined benefit superannuation assets.
5. In order to apply the treatment in paragraph 10 of this Attachment, a private health insurer must:
   1. have procedures in place to monitor changes in relevant laws and taxation practices that may affect the written opinions it is required to obtain covering netting of deferred tax assets and deferred tax liabilities; and
   2. ensure that the written opinions are updated in the event of changes in laws or taxation practices overseas that could materially impact on overseas taxation authorities continuing to allow netting of deferred tax assets and deferred tax liabilities.