Pure Foods Tasmania Limited (Pure Foods Tasmania) has reduced the amount of deferred tax assets recognised in its half-yearly report for the 2025-26 financial year by $4.5 million. This follows a review conducted under ASIC's financial reporting and audit surveillance program.
ASIC reviewed Pure Foods Tasmania's financial report for the financial year ended 30 June 2025 and raised concerns about the recognition of an unused tax loss as a deferred tax asset that did not meet the requirements of Accounting Standard AASB 112 Income Taxes (AASB 112).
Under AASB 112, an unused tax loss can only be recognised as a deferred tax asset if it is probable that future taxable profit will be available against which the unused tax losses can be utilised.
Following ASIC's review, Pure Foods Tasmania reversed its recognition of $4.5 million of deferred tax assets, accounting for 31% of its total assets, and disclosed the reversal in its half-yearly report for the financial year ending 30 June 2026.
ASIC reminds preparers of financial reports that careful judgement is required when recognising deferred tax losses as deferred tax assets.
Financial report preparers should consider an entity's likelihood of generating profits in the future, noting that this assessment becomes more uncertain for later periods.
Background
Pure Foods Tasmania is an ASX-listed food manufacturing company that develops, produces and sells a portfolio of premium Tasmanian and plant-based food products under brands including Woodbridge Smokehouse, Tasmanian Pâté, Daly Potato Co and The Cashew Creamery.
In its half-yearly report for the 2025-26 financial year, Pure Foods Tasmania made the following disclosure correcting the recognition of deferred tax assets:
'In assessing the recoverability of deferred tax assets, the Group prepares detailed financial forecasts that incorporate approved strategic initiatives and other factors relevant to future profitability. Because evidence supporting taxable profits in the near term is generally more persuasive than evidence relating to later periods, the Group has refined its approach to the weighting and timing of forecast profitability used in this assessment. This refinement does not represent a change in accounting policy, but rather an enhancement to the Group's methodology within the existing policy.
As a result of updated forecasts and the application of this refined methodology, the Group determined that the deferred tax asset in relation to previously recognised tax losses should be written-back during the period. The write-back that has been recognised in the income tax expense in relation to this is $4,570,855. These tax losses are available for use as the profitability of the Group increases.'
ASIC's financial reporting and audit surveillance program aims to improve the quality of financial reporting and to ensure financial reports have been prepared in accordance with the law, supporting investor confidence and the integrity of Australia's capital markets.
ASIC conducts regular risk-based reviews of the financial reports of selected companies and other public interest entities to monitor compliance with the Corporations Act 2001 and Australian Accounting Standards.
