Note 7.2

Taxation

7.2

Deferred taxation

Deferred taxation is provided using the liability method for all temporary differences arising between the tax bases of assets and liabilities and their carrying values for financial reporting purposes.

However, if the deferred income tax arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss, it is not accounted for. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by year-end and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Critical accounting estimates and assumptions
Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

	Capital allowances R’000	Fair value gains R’000	Pro- visions R’000	Tax losses R’000	Pre- payments R’000	Un- realised foreign exchange differences R’000	Other R’000	Total R’000
At 31 May 2014	426	37 730	(10 999)	(20 057)	2 330	7 535	(107)	16 858
Charged/(credited) to the income statement	(104)	(6 950)	(8 084)	(1 275)	395	6 875	(1 128)	(10 271)
Disposal of subsidiary	—	—	51	159	(371)	—	161	—
Acquisition of subsidiary	—	17 205	(139)	—	—	—	—	17 066
At 31 May 2015	322	47 985	(19 171)	(21 173)	2 354	14 410	(1 074)	23 653
Charged/(credited) to the income statement	(841)	(6 270)	(359)	1 471	1 973	19 458	(2 069)	13 363
Disposal of subsidiary	61	—	869	3 083	(59)	—	(41)	3 913
At 31 May 2016	(458)	41 715	(18 661)	(16 619)	4 268	33 868	(3 184)	40 929

	2016 R’000	2015 R’000
Capital allowances	(817)	(121)
Provisions	(18 768)	(19 681)
Tax losses	(16 619)	(21 173)
Other	(3 184)	(1 967)
Total deferred tax asset	(39 388)	(42 942)
Deferred tax liability comprises:
Capital allowances	359	443
Fair value gains	41 715	47 985
Provisions	107	510
Prepayments	4 268	2 354
Unrealised foreign exchange differences	33 868	14 410
Other	—	893
Total deferred tax liability	80 317	66 595
Net deferred tax	40 929	23 653
The analysis of deferred tax assets and deferred tax liabilities is as follows:
Deferred tax assets
Deferred tax assets to be recovered after more than 12 months	1 713	(561)
Deferred tax assets to be recovered within 12 months	(22 925)	(30 237)
Net deferred tax asset	(21 212)	(30 798)
Deferred tax liabilities
Deferred tax liabilities to be recovered after more than 12 months	68 217	42 306
Deferred tax liabilities to be recovered within 12 months	(6 076)	12 145
Net deferred tax liability	62 141	54 451
Net deferred tax	40 929	23 653

Where deferred tax assets have been recognised in respect of entities which have incurred losses in the current or prior years, a formal process of assessment of the future profitability of the entity has been performed based on detailed budgets and cash flow forecasts. As a result, management believes that the current tax losses will be utilised within one to five years.

Deferred tax assets are recognised for tax losses carried forward to the extent that the realisation of the related tax benefit through future taxable profits is probable. The Group did not recognise deferred income tax assets of R44.3 million (2015: R42.6 million) in respect of losses amounting to R158.2 million (2015: R152.3 million) that can be carried forward against future taxable income.

There is no withholding tax that would be payable on any dividends received from the Group’s associates and joint ventures and therefore no deferred tax has been raised in this regard.