7. 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 		 Purchase 
price 
allocations 
and fair 
value 
gains 
R'000 		 Provisions 
R'000 		 Tax losses 
R'000 		 Prepay- 
ments 
R'000 		 Unrealised 
foreign 
exchange 
differences 
R'000 		 Other 
R'000 		 Total 
R'000 
At 31 May 2019  13 982  221 386  (48 244) (50 600) 6 433  21 232  (3 837) 160 352 
Charged/(credited) to the income statement  (1 243) (17 491) 1 179  17 576  (58) 3 707  (9 117) (5 447)
Acquisition of subsidiaries  (101) –  –  (1 778) –  –  271  (1 608)
Foreign currency translation reserve  –  4 534  –  –  –  –  –  4 534 
Disposal of subsidiaries  (12 300) (98 867) 11 151  1 755  (619) (1 190) (130) (100 200)
At 31 May 2020  338  109 562  (35 914) (33 047) 5 756  23 749  (12 813) 57 631 
Charged/(credited) to the income statement  172 750  (12 139) (16 158) (68 271) (2 980) (23 749) 9 486  58 939 
Charged to other comprehensive income  –  –  –  –  –  –  2 928  2 928 
At 31 May 2021  173 088  97 423  (52 072) (101 318) 2 776  –  (399) 119 498 

 

  2021 
R'000 		 2020 
R'000 
Deferred tax asset comprises: 
Capital allowances  (358) (327)
Provisions  (52 072) (35 914)
Tax losses  (101 318) (33 047)
Other  (12 523) (20 600)
Total deferred tax asset  (166 271) (89 888)
Deferred tax liability comprises: 
Capital allowances  173 446  665 
Purchase price allocations and fair value gains  97 423  109 562 
Prepayments  2 776  5 756 
Unrealised foreign exchange differences  –  23 749 
Other  12 124  7 787 
Total deferred tax liability  285 769  147 519 
Net deferred tax  119 498  57 631 
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  (8 344) (10 398)
Deferred tax assets to be recovered within 12 months  (66 678) (56 961)
Net deferred tax asset  (75 022) (67 359)
Deferred tax liabilities 
Deferred tax liabilities to be recovered after more than 12 months  114 272  44 455 
Deferred tax liabilities to be recovered within 12 months  80 248  80 535 
Net deferred tax liability  194 520  124 990 
Net deferred tax  119 498  57 631 

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 R175.3 million (2020: R140.7 million) in respect of losses amounting to R686.3 million (2020: R562.9 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.