Annual report pursuant to Section 13 and 15(d)


12 Months Ended
Jun. 30, 2012
Income Tax Disclosure [Abstract]  

The Company follows ASC 740-10-10, under which an entity recognizes deferred tax assets and liabilities for future tax consequences or for events that were previously recognized in the Company’s financial statements or tax returns.  The measurement of deferred tax assets and liabilities is based on enacted tax law provisions.  The effects of future changes in tax laws or rates are not anticipated.  As of June 30, 2010, the Company operated exclusively in Australia.  The Company was wholly subject to Australia income tax laws and regulations, which are administered by the Australian Taxation Office for the year ended June 30, 2010.


On November 23, 2010, Propanc Health Group Corporation was incorporated in the state of Delaware.  In January 2011, Propanc Health Group Corporation acquired all of the outstanding shares of Propanc PTY LTD on a one-for-one basis making it a wholly-owned subsidiary.  As a result of these transactions, the Company is subject to the income tax laws of both the United States and Australia for the years ended June 30, 2011 and 2012.  For the years ended June 30, 2012 and 2011, all the Company’s loss before income taxes resulted entirely from its Australian activities and its taxable loss was only subject to Australian tax law.


At June 30, 2012, the Company has a net operating loss (NOL) for Australian tax purposes only, that approximates $6,412,751.   Consequently, the Company may have NOL carryforwards available for income tax purposes, which will continue to be available until they are recovered through earning taxable income.  Deferred tax assets would arise from the recognition of anticipated utilization of these net operating losses to offset future taxable income.   The NOL is subject to a reduction of up to $1,076,201, if a research and development credit the Company applied for is granted by the Australian Taxation Office.


The components for the provision for income taxes are as follows:


    Year Ended  
    June 30,     June 30,  
    2012     2011  
Current Taxes   $ (173,928)     $ (84,581)  
Deferred Taxes     -       -  
Provision for Income Taxes   $ (173,928)     $ (84,581)  


The items accounting for the difference between income taxes at the Australia statutory rate and the provision for income taxes are as follows:


    Year Ended  
    June 30,     June 30,  
    2012     2011  
    Amount     Impact on Rate     Amount     Impact on Rate  
Income Tax Expense (Benefit) at Australia Statutory Rate   $ (3,482,491)       (30.00) %   $ (670,967)       (30.00) %
Stock Based Compensation     -       0.00 %           0.00 %
R&D Refundable Tax Credit     (173,928)       (1.50) %     (84,581)        (3.78)   %
Reduction of NOL Carryforward Due to R&D Tax Credit     173,928       1.50 %     84,581        3.78   %
Deferred Tax Valuation Allowance     3,211,114       27.66 %     720,710        32.22 %
Foreign Exchange Rate Changes     97,449       0.84 %     (134,324)       (6.01) %
Total Income Tax Expense (Benefit)   $ (173,928)       (1.50) %   $ (84,581)        (3.79) %



Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and amounts used for income tax purposes. Significant components of the Company's net deferred income taxes are as follows:


    June 30,     June 30,  
    2012     2011  
Current Deferred Tax Assets            
 Provision for annual leave   $ 12,630     $ 10,832   
Superannuation     4,114       -  
Total Current Deferred Tax Assets   $ 16,744     $ 10,832   
Current Deferred Tax Liabilities                
 Prepaid Investor Services   $ -     $ (323,377)   
 Prepaid expenses           -  
 Prepaid insurance           -  
 Accounts Payable/trade creditors     -       -  
 Patent Costs     -       (226)   
Total Current Deferred Tax Liabilities   $ -     $ (323,603)  
Non-Current Deferred Tax Assets                
Prepaid Investor Services    $ 2,284,981      $ -  
 Capital Raising Costs     30,870       32,195   
 Legal Costs     30,948       32,277   
 Intellectual Property     15,410       16,071   
Patent Costs     23,518       -  
 Formation Expense     9,445       9,850   
 Net Operating Loss Carryover     1,893,262       1,316,442   
 Foreign Exchange Loss (OCI)     107,675       36,056   
Total Non-Current Deferred Tax Assets     4,396,109       1,422,891   
 Deferred Tax Valuation Allowance     (4,412,853)       (1,130,120)  
Total Non-Current Deferred Tax Assets     (16,744)       312,771   
Total Deferred Tax Assets (Net)   $     $  


Management has determined that the realization of the net deferred tax asset is not assured and has created a valuation allowance for the entire amount of such benefits.


The Company follows ASC 740-10, which provides guidance for the recognition and measurement of certain tax positions in an enterprise’s financial statements.  Recognition involves a determination whether it is more likely than not that a tax position will be sustained upon examination with the presumption that the tax position will be examined by the appropriate taxing authority having full knowledge of all relevant information.  


The Company’s policy is to record interest and penalties associated with unrecognized tax benefits as additional income taxes in the statement of operations.  As of June 30, 2012, the Company had no unrecognized tax benefits.  There were no changes in the Company’s unrecognized tax benefits during the years ended June 30, 2012 and 2011.  The Company did not recognize any interest or penalties during fiscal 2012 or 2011 related to unrecognized tax benefits.


The income tax returns filed for the tax years from inception will be subject to examination by the relevant taxing authorities.