| Notes to the Group annual financial statements l
Note 7.2 |
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| 7.2 |
Deferred taxation
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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.
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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’00 |
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| At 31 May 2015 |
322 |
47 985 |
(19 171) |
(21 173) |
2 354 |
14 410 |
(1 074) |
23 653 |
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| Charged/(credited) to the income statement |
(841) |
(6 270) |
(359) |
1 471 |
1 973 |
19 458 |
(2 069) |
13 363 |
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| Disposal of subsidiary |
61 |
— |
869 |
3 083 |
(59) |
— |
(41) |
3 913 |
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| At 31 May 2016 |
(458) |
41 715 |
(18 661) |
(16 619) |
4 268 |
33 868 |
(3 184) |
40 929 |
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| Charged/(credited) to the income statement |
7 828 |
(5 411) |
(3 720) |
1 050 |
(1 466) |
(16 134) |
3 900 |
(13 953) |
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| Acquisition of subsidiary |
— |
— |
— |
(721) |
— |
— |
— |
(721) |
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| At 31 May 2017 |
7 370 |
36 304 |
(22 381) |
(16 290) |
2 802 |
17 734 |
716 |
26 255 |
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2017
R’000 |
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2016
R’000 |
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| Deferred tax asset comprises: |
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| Capital allowances |
— |
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(817) |
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| Provisions |
(23 076) |
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(18 768) |
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| Tax losses |
(16 290) |
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(16 619) |
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| Other |
(5 262) |
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(3 184) |
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| Total deferred tax asset |
(44 628) |
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(39 388) |
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| Deferred tax liability comprises: |
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| Capital allowances |
7 370 |
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359 |
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| Fair value gains |
36 304 |
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41 715 |
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| Provisions |
695 |
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|
107 |
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| Prepayments |
2 802 |
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4 268 |
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| Unrealised foreign exchange differences |
17 734 |
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33 868 |
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| Other |
5 978 |
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— |
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| Total deferred tax liability |
70 883 |
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80 317 |
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| Net deferred tax |
26 255 |
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40 929 |
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| The analysis of deferred tax assets and deferred tax liabilities is as follows: |
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| Deferred tax assets |
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| Deferred tax assets to be recovered after more than 12 months |
10 396 |
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1 713 |
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| Deferred tax assets to be recovered within 12 months |
(37 093) |
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(22 925) |
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| Net deferred tax asset |
(26 697) |
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(21 212) |
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| Deferred tax liabilities |
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| Deferred tax liabilities to be recovered after more than 12 months |
44 168 |
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68 217 |
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| Deferred tax liabilities to be recovered within 12 months |
8 784 |
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(6 076) |
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| Net deferred tax liability |
52 952 |
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62 141 |
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| Net deferred tax |
26 255 |
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40 929 |
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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 (2016: R44.3 million) in respect of losses amounting to R158.5 million (2016: R158.2 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 equity accounted associates and joint ventures and therefore no deferred tax has been raised in this regard. Deferred tax at the CGT rate has been raised on investments in associates and joint venture that are classified as venture capital investments.
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| Notes to the Group annual financial statements l Note 7.2 |
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