6 INCOME TAX (a) Major components of income tax credit for the periods presented are: For the year ended 30 June 2023 $ For the year ended 30 June 2022 $ Statement of comprehensive income Current income tax charge – – Decrease/(Increase) in deferred tax liability on intangible assets – 704,421 Increase in deferred tax asset on losses brought to account* – 1,354,092 Income tax credit reported in the Statement of Comprehensive Income – 2,058,513 * Relates to the recognition of INOVIQ Ltd tax losses for the 2021, 2020, 2019, 2018 and 2017 financial years, and an estimated tax loss for the 2022 financial year, to offset the deferred tax liability required to be recognised on the value of the hTERT, Molecular NETS and SubB2M intangible assets acquired in the merger with Sienna. (b) A reconciliation of income tax expense applicable to accounting loss, before income tax at the statutory income tax rate, to income tax expense at the Group’s effective income tax rate for the periods ended 30 June 2023 and 30 June 2022 is as follows: For the year ended 30 June 2023 $ For the year ended 30 June 2022 $ Accounting loss before tax (8,969,241) (20,254,490) At statutory income tax rate of 25% (2022: 25%) (2,242,310) (5,063,623) Deferred tax asset brought to account – (619,593) Amortisation of intangible assets 241,241 419,352 Impairment of goodwill and intangible asset - (2022: hTERT) – 3,205,351 Deferred tax asset not brought to account 2,001,069 – Income tax credit reported in the Statement of Comprehensive Income – 2,058,513 Total estimated tax losses not brought to account at 30 June 2023 for the consolidated tax group, comprising INOVIQ Limited and its wholly owned subsidiary Sienna Cancer Diagnostics Ltd (Sienna), totals $7,072,729. This total includes losses incurred by Sienna since 1 July 2015 being the period from which point onwards an external tax specialist determined tax losses would be accessible to the Group after application of the Income Tax Assessment Act 1997 loss transfer provisions, encompassing the requirement to satisfy either the Continuity of Ownership Test (COT) or Similar Business Test (SBT). Tax losses incurred by foreign subsidiary INOVIQ Inc. (formerly Sienna Cancer Diagnostics Inc.) are not included in estimated tax losses not brought to account. It is not probable that the Group will be in a position to utilise these tax losses in future. Some deferred tax assets have not been brought to account at 30 June 2023 because the directors do not believe it is appropriate to regard realisation of the future tax benefit as probable. These benefits will only be obtained if: (i) t he Group derives future assessable income of a nature and of an amount sufficient to enable the benefit from the deduction for the loss to be realised; (ii) t he Group complies with the conditions for the deductibility imposed by law including the continuity of ownership and/or business tests; and (iii) n o changes in tax legislation adversely affect the Group in realising the benefit from the deduction for the loss. 51 Annual Report 2023
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