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Deferred tax balances | 12 Months Ended
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Jun. 30, 2018
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Deferred tax balances | 12 Deferred tax balances The movement for the year in the Group’s net deferred tax position is as follows:
|  | 2018 |  |  | 2017 |  |  | 2016 |
|  | US$M |  |  | US$M |  |  | US$M |
Net deferred tax asset/(liability) |  |  |  |  |  |  |  |  |  |  |  |
At the beginning of the financial year |  |  | 2,023 |  |  |  | 1,823 |  |  |  | (1,681 | )
Income tax (charge)/credit recorded in the income statement (1) |  |  | (1,445 | ) |  |  | 188 |  |  |  | 3,508 |
Income tax credit/(charge) recorded directly in equity |  |  | 17 |  |  |  | 12 |  |  |  | (25 | )
Other movements |  |  | (26 | ) |  |  | – |  |  |  | 21 |
At the end of the financial year |  |  | 569 |  |  |  | 2,023 |  |  |  | 1,823 |
(1) | Includes Discontinued operations income tax credit to the income statement of US$510 million (2017: US$219 million; 2016: US$2,990 million).
For recognition and measurement refer to note 5 ‘Income tax expense’. The composition of the Group’s net deferred tax assets and liabilities recognised in the balance sheet and the deferred tax expense charged/(credited) to the income statement is as follows:
|  | Deferred tax assets |  |  | Deferred tax liabilities |  |  | Charged/(credited) to the income statement |
|  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |  |  | 2016 |
|  | US$M |  |  | US$M |  |  | US$M |  |  | US$M |  |  | US$M |  |  | US$M |  |  | US$M |
Type of temporary difference |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Depreciation |  |  | (2,756 | ) |  |  | (3,454 | ) |  |  | 1,356 |  |  |  | 1,411 |  |  |  | (752 | ) |  |  | 391 |  |  |  | (2,282 | )
Exploration expenditure |  |  | 492 |  |  |  | 543 |  |  |  | – |  |  |  | – |  |  |  | 51 |  |  |  | (22 | ) |  |  | (3 | )
Employee benefits |  |  | 321 |  |  |  | 379 |  |  |  | (2 | ) |  |  | 3 |  |  |  | 31 |  |  |  | (37 | ) |  |  | 56 |
Closure and rehabilitation |  |  | 1,627 |  |  |  | 1,809 |  |  |  | (194 | ) |  |  | (230 | ) |  |  | 218 |  |  |  | (151 | ) |  |  | 36 |
Resource rent tax |  |  | 468 |  |  |  | 559 |  |  |  | 1,328 |  |  |  | 1,614 |  |  |  | (194 | ) |  |  | (189 | ) |  |  | (8 | )
Other provisions |  |  | 141 |  |  |  | 131 |  |  |  | (2 | ) |  |  | (1 | ) |  |  | (11 | ) |  |  | 14 |  |  |  | 8 |
Deferred income |  |  | 21 |  |  |  | (2 | ) |  |  | – |  |  |  | (10 | ) |  |  | (13 | ) |  |  | 3 |  |  |  | (49 | )
Deferred charges |  |  | (374 | ) |  |  | (443 | ) |  |  | 272 |  |  |  | 322 |  |  |  | (119 | ) |  |  | (77 | ) |  |  | 62 |
Investments, including foreign tax credits |  |  | 546 |  |  |  | 1,145 |  |  |  | 691 |  |  |  | 648 |  |  |  | 615 |  |  |  | (17 | ) |  |  | (284 | )
Foreign exchange gains and losses |  |  | (120 | ) |  |  | (87 | ) |  |  | 16 |  |  |  | 69 |  |  |  | (20 | ) |  |  | (77 | ) |  |  | (310 | )
Tax losses |  |  | 3,758 |  |  |  | 5,352 |  |  |  | – |  |  |  | – |  |  |  | 1,595 |  |  |  | (381 | ) |  |  | (809 | )
Other |  |  | (83 | ) |  |  | (144 | ) |  |  | 7 |  |  |  | (61 | ) |  |  | 44 |  |  |  | 355 |  |  |  | 75 |
Total |  |  | 4,041 |  |  |  | 5,788 |  |  |  | 3,472 |  |  |  | 3,765 |  |  |  | 1,445 |  |  |  | (188 | ) |  |  | (3,508 | )
The Group recognises the benefit of tax losses amounting to US$3,758 million (2017: US$5,352 million) only to the extent of anticipated future taxable income or gains in relevant jurisdictions. The amounts recognised in the Financial Statements in respect of each matter are derived from the Group’s best judgements and estimates as described in note 5 ‘Income tax expense’. The composition of the Group’s unrecognised deferred tax assets and liabilities is as follows:
|  | 2018 |  |  | 2017 |
|  | US$M |  |  | US$M |
Unrecognised deferred tax assets |  |  |  |  |  |  |  |
Tax losses and tax credits (1) |  |  | 3,028 |  |  |  | 2,687 |
Investments in subsidiaries (2) |  |  | 1,659 |  |  |  | 856 |
Deductible temporary differences relating to PRRT (3) |  |  | 2,282 |  |  |  | 2,293 |
Mineral rights (4) |  |  | 2,263 |  |  |  | 2,293 |
Other deductible temporary differences (5) |  |  | 437 |  |  |  | 478 |
Total unrecognised deferred tax assets |  |  | 9,669 |  |  |  | 8,607 |
Unrecognised deferred tax liabilities |  |  |  |  |  |  |  |
Investments in subsidiaries (2) |  |  | 2,216 |  |  |  | 2,500 |
Taxable temporary differences relating to unrecognised deferred tax asset for PRRT (3) |  |  | 685 |  |  |  | 694 |
Total unrecognised deferred tax liabilities |  |  | 2,901 |  |  |  | 3,194 |
(1) | At 30 June 2018, the Group had income and capital tax losses with a tax benefit of US$1,946 million (2017: US$1,844 million) and tax credits of US$1,082 million (2017: US$843 million), which are not recognised as deferred tax assets, because it is not probable that future taxable profits or capital gains will be available against which the Group can utilise the benefits.
The gross amount of tax losses carried forward that have not been recognised are as follows:
Year of expiry |  | Total |
|  | US$M |
Income tax losses |  |  |  |
Not later than one year |  |  | 363 |
Later than one year and not later than two years |  |  | 402 |
Later than two years and not later than five years |  |  | 897 |
Later than five years and not later than 10 years |  |  | 398 |
Later than 10 years and not later than 20 years |  |  | 2,446 |
Unlimited |  |  | 1,734 |
|  |  | 6,240 |
Capital tax losses |  |  |  |
Not later than one year |  |  | – |
Later than two years and not later than five years |  |  | 144 |
Unlimited |  |  | 3,471 |
Gross amount of tax losses not recognised |  |  | 9,855 |
Tax effect of total losses not recognised |  |  | 1,946 |
Of the US$1,082 million of tax credits, US$831 million expires not later than 10 years and US$251 million expires later than 10 years and not later than 20 years.
(2) | The Group had deferred tax assets of US$1,659 million at 30 June 2018 (2017: US$856 million) and deferred tax liabilities of US$2,216 million (2017: US$2,500 million) associated with undistributed earnings of subsidiaries that have not been recognised because the Group is able to control the timing of the reversal of the temporary differences and it is not probable that these differences will reverse in the foreseeable future.
(3) | The Group had US$2,282 million of unrecognised deferred tax assets relating to Australian Petroleum Resource Rent Tax (PRRT) at 30 June 2018 (2017: US$2,293 million relating to Australian PRRT), with a corresponding unrecognised deferred tax liability for income tax purposes of US$685 million (2017: US$694 million). Recognition of a deferred tax asset for PRRT depends on benefits expected to be obtained from the deduction against PRRT liabilities.
(4) | The Group had deductible temporary differences relating to mineral rights for which deferred tax assets of US$2,263 million at 30 June 2018 (2017: US$2,293 million) had not been recognised because it is not probable that future capital gains will be available, against which the Group can utilise the benefits. The deductible temporary differences do not expire under current tax legislation.
(5) | The Group had deductible temporary differences for which deferred tax assets of US$437 million at 30 June 2018 (2017: US$478 million) had not been recognised because it is not probable that future taxable profits will be available against which the Group can utilise the benefits. The deductible temporary differences do not expire under current tax legislation.

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- Definition The disclosure of deferred taxes. [Refer: Deferred tax liabilities; Deferred tax assets] + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Name IAS -Number 1 -IssueDate 2017-01-01 -Paragraph 10 -Subparagraph e -URI http://eifrs.ifrs.org/eifrs/XBRL?type=IAS&num=1&date=2017-03-01&anchor=para_10_e&doctype=Standard -URIDate 2017-03-09 + Details
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