143 / 198
For the year ended 31 May 2016
BLUE LABEL INTEGRATED ANNUAL REPORT 2016
141
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
continued
7.
Taxation
7.1 Income tax expense
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at
year-end in the countries where the Company’s subsidiaries, associates and joint ventures operate and generate
taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in
which applicable tax regulations are subject to interpretation and establishes provisions where appropriate on the
basis of amounts expected to be paid to the tax authorities.
The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to
the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is
also recognised in other comprehensive income or directly in equity respectively.
Uncertain tax positions are considered by the Group at the level of the individual uncertainty or group of related
uncertainties.
Critical accounting estimates and assumptions
As with any enterprise, the Group faces uncertainties in the markets in which it operates and over which it has little
or no control. The Group is subject to income tax in numerous jurisdictions and judgement is required in
determining the provision for tax.
There are transactions and calculations for which the ultimate tax determination is uncertain during the ordinary
course of business. Amounts accrued are based on management’s interpretation of country-specific tax law and the
likelihood of settlement. Where the final tax outcome of these matters is different from the amounts that were
initially recorded, such differences will impact the current income tax and deferred tax provisions in the period in
which such determination is made.
Deferred tax assets are recognised to the extent that it is probable that taxable income will be available in the future
against which these can be utilised. Future taxable income is estimated based on business plans which include estimates
and assumptions regarding economic growth, interest rates, inflation and competitive forces.
2016
R’000
2015
R’000
Current tax
305 420
275 768
Current year
305 652
276 297
Adjustment in respect of prior years
(232)
(529)
Deferred tax
13 363
(10 271)
Current year
14 749
(9 845)
Adjustment in respect of prior years
(1 386)
(426)
318 783
265 497
Profit before tax
1 050 395
846 690
Tax at 28%
294 111
237 073
Income of a capital nature
—
(6 219)
Fair value adjustments
(10 829)
1 675
Expenditure of a capital nature
9 082
4 138
Other income not subject to tax
(5 238)
(9 639)
Other expenses not deductible for tax purposes
8 090
610
Capital gains tax
2 431
8 698
Tax effect of assessed losses not recognised
2 467
7 901
Share of losses from associates and joint ventures
20 096
22 215
Adjustment in respect of prior years
(1 618)
(955)
Effect of different tax dispensations
191
—
Tax charge
318 783
265 497
Effective tax rate (%)
30
31