Toyota 2008 Annual Report Download - page 113

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•Annual Report 2008 • TOYOTA
Performance Messages from the Management &
•Overview •Management •Special Feature •Business Overview •Corporate Information •Financial Section •Investor Information •
U.S. dollars
Yen in millions in millions
For the year ended
For the years ended March 31, March 31,
2006 2007 2008 2008
Valuation allowance at beginning of year......................................................... ¥102,737 ¥ 93,629 ¥ 95,225 $ 950
Additions.......................................................................................................... 10,285 20,785 4,837 48
Deductions....................................................................................................... (19,084) (19,015) (17,871) (178)
Other ................................................................................................................ (309) (174) ——
Valuation allowance at end of year.................................................................... ¥ 93,629 ¥ 95,225 ¥ 82,191 $ 820
The other amount includes the impact of consolidation and deconsolidation of certain entities due to changes in ownership interest
during the years ended March 31, 2006 and 2007.
The deferred tax assets and liabilities that comprise the net deferred tax liability are included in the consolidated balance sheets
as follows:
U.S. dollars
Yen in millions in millions
March 31, March 31,
2007 2008 2008
Deferred tax assets
Deferred income taxes (Current assets) ................................................................................... ¥ 551,503 ¥ 563,220 $ 5,621
Investments and other assets—other....................................................................................... 98,043 111,477 1,113
Deferred tax liabilities
Other current liabilities .............................................................................................................. (6,788) (6,954) (69)
Deferred income taxes (Long-term liabilities).......................................................................... (1,312,400) (1,099,006) (10,969)
Net deferred tax liability........................................................................................................ ¥ (669,642) ¥(431,263) $ (4,304)
Because management intends to reinvest undistributed earn-
ings of foreign subsidiaries to the extent not expected to be
remitted in the foreseeable future, management has made no
provision for income taxes on those undistributed earnings
aggregating ¥2,751,054 million ($27,458 million) as of March 31,
2008. Toyota estimates an additional tax provision of ¥227,517
million ($2,271 million) would be required if the full amount of
those undistributed earnings became subject to Japanese
taxes.
Operating loss carryforwards for tax purposes attributed to con-
solidated subsidiaries as of March 31, 2008 were approximately
¥155,320 million ($1,550 million) and are available as an offset
against future taxable income of such subsidiaries. The majority
of these carryforwards expire in years 2009 to 2028.
Toyota adopted FIN 48 on April 1, 2007. The adoption of FIN
48 did not result in a cumulative-effect adjustment to retained
earnings balance as of April 1, 2007.
The valuation allowance mainly relates to deferred tax assets
of the consolidated subsidiaries with operating loss carryfor-
wards for tax purposes that are not expected to be realized.
The net changes in the total valuation allowance for deferred
tax assets for the years ended March 31, 2006, 2007 and 2008
consist of the following:
A summary of the gross unrecognized tax benefits changes for the year ended March 31, 2008, is as follows:
U.S. dollars
Yen in millions in millions
For the year ended For the year ended
March 31, March 31,
2008 2008
Balance at beginning of year............................................................................................................................ ¥29,639 $296
Reductions based on tax positions related to the current year .................................................................... (424) (4)
Additions for tax positions of prior years ....................................................................................................... 25,954 259
Reductions for tax positions of prior years...................................................................................................... (8,771) (88)
Reductions for tax positions related to lapse of statute of limitations .........................................................(30) (0)
Reductions for settlement ................................................................................................................................ (4,618) (46)
Other .................................................................................................................................................................. (4,028) (40)
Balance at end of year .................................................................................................................................. ¥37,722 $377
The amount of unrecognized tax benefits that, if recognized,
would affect the effective tax rate was not material at March 31,
2008. Toyota does not believe it is reasonably possible that the
total amounts of unrecognized tax benefits will significantly
increase or decrease within the next twelve months.