| |
Significant accounting judgements, estimates and assumptions
Management determines the income tax charge in accordance with the applicable tax laws and rules which are subject to interpretation.
The calculation of the Group's total tax charge involves judgements and estimations in respect of certain items whose tax treatment cannot be
finalised until resolution has been reached with the involved parties. The resolution of some items may give rise to material profits, losses and/or
cash flows. Where the effect of tax is not certain, taxation liability estimates are made by management based on the available information, using
either the most likely outcome approach or the expected value approach. Tax assets are only recognised when amounts receivable are virtually
certain. The resolution of taxation issues is not always within the control of the Group and, as a result, there can be substantial differences between
the taxation charge in the statement of profit or loss and other comprehensive income and the current tax payments.
Summary of significant accounting policies
Current tax is calculated as amounts that are expected to be paid (or recovered), using the tax rates and laws that have been enacted or substantively
enacted by the reporting period date. Deferred tax is calculated on all taxable temporary differences that exist at the reporting date, except those
that are exempted based on IAS 12.
Telkom periodically evaluates positions taken in tax returns with respect to situations in which the applicable tax regulation is subject to interpretation.
The Group establishes provisions where the position is considered more likely than not to occur. The provision is recognised and measured based
on the single most likely outcome approach.
| |
|
Group |
Company |
| |
|
31 March
2022
Rm |
31 March
2022
Rm |
| Taxation1 |
3 531 |
(1 167) |
2 039 |
(313) |
| South African normal company taxation |
(499) |
(820) |
– |
11 |
| |
Current taxation2 |
(502) |
(827) |
– |
– |
| |
Overprovision for prior year |
3 |
7 |
– |
11 |
| Deferred taxation (refer to note 8.2) |
4 031 |
(347) |
2 039 |
(324) |
| |
Capital allowances1 |
3 252 |
(492) |
1 490 |
(566) |
| |
Provisions and other allowances |
293 |
(186) |
345 |
(127) |
| |
Tax losses1 |
470 |
353 |
197 |
345 |
| |
Acquisition of BCX |
9 |
8 |
– |
– |
| |
Tax rate change |
– |
(24) |
– |
(15) |
| |
Overprovision/(underprovision) for prior year2 |
7 |
(6) |
7 |
39 |
| Withholding tax |
(1) |
– |
– |
– |
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
% |
% |
| Reconciliation of taxation rate |
|
|
|
|
| South African normal rate of taxation |
27.0 |
28.0 |
27.0 |
28.0 |
| Increased/(decreased) by the following adjustments: |
(0.9) |
2.7 |
(9.7) |
(21.9) |
| Non-taxable income |
0.1 |
(0.3) |
1.3 |
(22.6) |
| |
Dividends received |
– |
(0.2) |
1.3 |
(22.5) |
| |
Profit on sale of assets |
– |
(0.1) |
– |
(0.1) |
| |
Cell captive fair value adjustments |
– |
– |
– |
– |
| |
Other exempt income |
0.1 |
– |
– |
– |
| Non-deductible expenditure4 |
(0.9) |
2.4 |
(11.1) |
1.2 |
| |
Capital expenditure5 |
(0.5) |
1.6 |
(0.3) |
0.8 |
| |
IFRS 2 share-based payment adjustments |
0.2 |
0.1 |
0.2 |
0.1 |
| |
Interest and penalties |
– |
0.1 |
– |
– |
| |
Other disallowed expenditure6 |
(0.6) |
0.6 |
(11.0) |
0.3 |
| Prior year adjustments |
– |
(0.1) |
0.1 |
(0.8) |
| |
Prior year (overprovision)/underprovision tax expense2 |
– |
(0.1) |
0.1 |
(0.8) |
| Other taxes |
(0.1) |
0.7 |
– |
0.3 |
| |
Differences in tax rates, foreign tax and withholding tax |
(0.1) |
– |
– |
– |
| |
Tax rate change |
– |
0.7 |
– |
0.3 |
| Effective rate3 |
26.1 |
30.7 |
17.3 |
6.1 |
| 1 |
The decrease of R4 698 million in the prior year tax expense to a tax credit of R3 531 million in the current year is primarily due to the decrease in current tax and the current year
deferred tax impact of the impairment of property, plant and equipment and intangible assets and tax losses. |
| 2 |
The decrease in current tax is primarily attributable to the reduction in the Group's profit before tax and taxable income. |
| 3 |
The decrease of 4.6% in the effective tax rate is primarily attributable to the R17 302 million decline in the Group's profit before tax to a loss before tax, the decrease of
R4 698 million in the tax expense to a tax credit and the reduction in the current year's tax credit by an increase in net non-deductible expenses and the 1% reduction in the statutory
tax rate from 28% to 27%. |
| 4 |
The current year tax credit is reduced by the non-deductible expenditure adjustments, whereas the prior year tax expense was increased by these adjustments. The result is a net
increase of 3.7% in the net non-deductible expenditure. The primary reason for the increase is addressed below. |
| 5 |
The increase of 2.1% in the non-deductible capital expenditure is primarily attributable to the current year impairment of property, plant and equipment and intangible assets which
is non-deductible, set off by a reduction in assets scrapped that do not qualify for tax deductions. |
| 6 |
Other comprises mainly the write-off of investments, consulting fees, legal fees and donations which are not tax deductible. The increase of 1.2% is primarily attributable to the
write-off of the investments in the FutureMakers Fund and the increase of non-deductible consulting fees. |
|
