39. CONTINGENT LIABILITIES
During the year, Jeta Gardens (Qld) Pty Ltd was subjected to a taxation audit by the Australian Taxation Office (“ATO”). The
Deputy Commission of Taxation is reviewing the GST treatment of the rental expenses paid to Al-Aqar Australia Pty Ltd, in
which 100% of GST input tax credits has been claimed to date. The ATO has engaged a qualified property valuer to apportion
the property between the aged care facility, which is GST free (100% input tax credits are able to be claimed), and the
retirement village, which is input taxed (0% input tax credits are able to be claimed).
The ATO is also disputing as to whether the apportionment should be the responsibility of the Jeta Gardens (Qld) Pty Ltd or
the landlord. At this stage, no clarification of this matter has been forthcoming. Consequently, the directors are not in a
position to confirm if the Company will be liable to any further taxation on the amounts which could be involved.
40. FAIR VALUE OF FINANCIAL INSTRUMENTS
(a) Determination of fair value
Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of
fair value
The following are classes of financial instruments that are not carried at fair value and whose carrying amounts are
reasonable approximation of fair value:
Note
Receivables
22
Deposits, cash and bank balances
23
Payables
25
Borrowings
26
Deposits
29
The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values, either due to
their short-term nature or that they are floating rate instruments that are re-priced to market interest rates on or near
the reporting date.
The fair values of long term receivables and payables, which comprise advances to or from subsidiaries, are estimated
by discounting expected future cash flows at market incremental lending rate for similar types of lending, borrowing or
leasing arrangement at the reporting date.
(b) Fair value measurement
The fair value measurement hierarchies used to measure assets and liabilities carried at fair value in the statements of
financial position as at 31 December 2014 are as follows:
Level 1 fair value
Level 1 fair value is derived from quoted price (unadjusted) in active markets for identical assets or liabilities.
Level 2 fair value
Level 2 fair value is estimated using inputs other than quoted prices included within Level 1 that are observable, either
directly or indirectly.
Level 3 fair value
Level 3 fair value is estimated using inputs that are not based on observable market data.
288
KPJ Healthcare Berhad annual report
2014
Notes to the
Financial Statements
For the financial year ended 31 December 2014 (continued)
