Page 191 - Annual Report 2020

6 Income tax expense

2020 2019 2018
US$M US$M US$M Strategic Report
Total taxation expense comprises:
Current tax expense 5,109 5,408 5,052
Deferred tax (benefit)/expense (335) 121 1,955
4,774 5,529 7,007

2020 2019 2018
US$M US$M US$M
Factors affecting income tax expense for the year
Income tax expense differs to the standard rate of corporation tax as follows:
Profit before taxation 13,510 15,049 14,751 Governance at BHP
Tax on profit at Australian prima facie tax rate of 30 per cent 4,053 4,515 4,425
Impact of US tax reform
Tax rate changes − – 1,390
Non-tax effected operating losses and capital gains − – 834
Tax on remitted and unremitted foreign earnings (1) − – 194
Recognition of previously unrecognised tax assets − – (95)
Other − – (3)
Subtotal − – 2,320
Other items not related to US tax reform
Non-tax effected operating losses and capital gains 707 742 721 Remuneration Report
Tax on remitted and unremitted foreign earnings 225 283 401
Tax effect of (loss)/profit from equity accounted investments, related impairments and expenses (2) 154 164 (44)
Amounts under/(over) provided in prior years 64 (21) (51)
Foreign exchange adjustments 20 (25) (152)
Tax rate changes (8) 6 (79)
Recognition of previously unrecognised tax assets (30) (10) (170)
Investment and development allowance (99) (94) (180)
Impact of tax rates applicable outside of Australia (3) (167) (312) (484)
Other (211) 87 172
Income tax expense 4,708 5,335 6,879 Directors’ Report
Royalty-related taxation (net of income tax benefit) 66 194 128
Total taxation expense 4,774 5,529 7,007
(1) Comprising US$797 million repatriation tax net of US$603 million of previously unrecognised tax credits.
(2) The (loss)/profit from equity accounted investments, related impairments and expenses is net of income tax. This item removes the prima facie tax effect on such
(loss)/profit, related impairments and expenses.
(3) All profits earned in Singapore by BHP’s Sales and Marketing organisation from the sale of our Australian commodities acquired from entities controlled by BHP Group
Limited are subject to Australian ‘top up tax’ under the Controlled Foreign Company tax rules in FY2020. This reflects the change in ownership of the main Sales and
Marketing entity, in accordance with the settlement agreement entered into with the Australian Taxation Office in FY2019 to resolve a long-standing transfer pricing dispute.
5
Income tax recognised in other comprehensive income is as follows:
2020 2019 2018
US$M US$M US$M
Income tax effect of: Financial Statements
Items that may be reclassified subsequently to the income statement:
Net valuation gains on investments taken to equity − − (3)
Cash flow hedges:
Gains/(losses) taken to equity 94 98 (25)
(Gains)/losses transferred to the income statement (89) (90) 64
Income tax credit relating to items that may be reclassified subsequently to the income statement 5 8 36
Items that will not be reclassified to the income statement:
Remeasurement gains/(losses) on pension and medical schemes 25 7 (22)
Others 1 12 8 Additional information
Income tax credit/(charge) relating to items that will not be reclassified to the income statement 26 19 (14)
Total income tax credit relating to components of other comprehensive income (1) 31 27 22
(1) Included within total income tax relating to components of other comprehensive income is US$31 million relating to deferred taxes and US$ nil relating to current
taxes (2019: US$15 million and US$12 million; 2018: US$17 million and US$5 million). Shareholder information

BHP Annual Report 2020 189