Notes to the consolidated financial statements | Note 6

6. Taxation
 

Income taxation comprises current and deferred tax. An income tax expense is recognised in profit or loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current taxation comprises tax payable calculated based on the expected taxable income for the year, using the tax rates enacted or substantially enacted at the financial position date, and any adjustment of tax payable for previous years.

Deferred taxation is charged to the income statement except to the extent that it relates to a transaction that is recognised directly in equity, or a business combination that is an acquisition. The effects on deferred taxation of any changes in tax rates is recognised in the income statement, except to the extent that it relates to items previously charged or credited directly to equity.

A deferred taxation asset is recognised to the extent that it is probable that future taxable profits will be available against which the associated unused tax losses and deductible temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
 
6.1. Income tax expense
 
      2022 
R'000 		 2021 
R'000 
Current taxation  2 137 277  1 840 111 
   Current year  2 117 841  1 832 217 
   Prior years' under (overprovision) 19 436  7 894 
Deferred taxation  187 079  (271 727)
   Current year  (27 037) (306 979)
   Prior years' under (overprovision) provision  (41 521) 35 252 
   Change in rate of taxation  255 637  – 
Foreign withholding taxation  7 892  102 390 
Total taxation per consolidated income statement  2 332 248  1 670 774 
Comprising       
   South African taxation  1 878 641  1 464 070 
   Foreign taxation  453 607  206 704 
      2 332 248  1 670 774 

The following changes in taxation rates have been substantially enacted during the year: The South African corporate tax has changed from 28% to 27% for years of assessment ending on or after 31 March 2023 (R48 million change in rate of taxation credit); and from 1 April 2023, a change in the United Kingdom main rate of corporate tax from 19% to 25% (R304 million change in rate of taxation charge).
6.2.  Taxation paid 
  
   2022 
R'000 		 2021 
R'000 
Net amounts receivable at beginning of year  (114 544) (112 988)
Current taxation charge  (2 145 169) (1 942 501)
Businesses acquired and subsidiary recognised  (6 649) (37 044)
Businesses disposed of  591  4 258 
Transfer from discontinued operations  –  144 257 
Exchange rate adjustments  (1 879) 15 200 
Amounts payable at end of year  661 467  482 485 
Amounts receivable at end of year  (383 325) (367 941)
Taxation paid  (1 989 508) (1 814 274)

The reconciliation of the effective taxation rate with the South African company taxation rate is:

   2022 
% 		 2021 
% 
Taxation for the year as a percentage of profit before taxation  30.0  28.9 
Withholding tax  (0.1) (1.8)
Change in tax rate  (3.6) – 
Net change in impairment of associates  –  (0.4)
Associates  0.4  0.5 
Effective rate excluding associate income and tax rate changes  26.7  27.2 
Dividend and exempt income  0.6  1.2 
Foreign taxation rate differential  2.7  0.9 
Preference share funding  (0.6) (0.8)
Other non-deductible expenses  (1.1) (0.6)
Changes in recognition of deferred tax assets  (0.3) 1.0 
Capital gains rate differential  (0.1) – 
Changes in prior years' estimation  0.3  (0.7)
Acquisition costs  (0.2) (0.2)
Rate of South African company taxation  28.0  28.0 
 
6.3.  Deferred taxation 
  
   2022 
R'000 		 2021 
R'000 
Deferred taxation assets  1 518 704  1 538 254 
Deferred taxation liabilities  (4 092 040) (3 907 936)
Net deferred taxation liability  (2 573 336) (2 369 682)
Movement in net deferred taxation assets and liabilities       
Balance at beginning of year  (2 369 682) (2 343 865)
Per consolidated income statement  (187 079) 271 727 
Items recognised directly in equity, other comprehensive income  16 416  11 382 
Movement in discontinued operations  –  (205 910)
On acquisition of businesses and recognition of subsidiary  (6 722) (195 096)
On disposal of businesses  (27 216) (1 595)
Exchange rate adjustments  947  93 675 
Balance at end of year  (2 573 336) (2 369 682)
Estimated tax losses available for offset against future taxable income  2 739 107  3 008 279 
Utilised in the computation of deferred taxation  (1 627 538) (1 803 827)
Not accounted for in deferred taxation  1 111 569  1 204 452 

Deferred taxation assets have not been recognised in respect of certain tax losses as the directors believe it is not probable that the relevant companies will generate taxable profit in the near future, against which the benefits can be utilised.

      2022    
 
Temporary differences 		 Assets 
R'000 		 Liabilities 
R'000 		 Net 
R'000 
Differential between carrying values and tax values of property, plant and equipment  22 094  (923 089) (900 995)
Differential between carrying values and tax values of intangible assets  (25 351) (3 178 550) (3 203 901)
Right-of-use assets  (968 795) (263 956) (1 232 751)
Lease liabilities  1 118 581  284 972  1 403 553 
Estimated taxation losses  350 110  (7 514) 342 596 
Staff related allowances and liabilities  541 271  (29 888) 511 383 
Inventories  110 710  (284) 110 426 
Investments  21 652  (159 242) (137 590)
Trade and other receivables  13 670  2 793  16 463 
Trade, other payables and provisions  334 762  182 718  517 480 
   1 518 704  (4 092 040) (2 573 336)

 

         2021          
Temporary differences Assets 
R'000 		    Liabilities 
R'000 		    Net 
R'000 		   
Differential between carrying values and tax values of property, plant and equipment  77 459     (943 557)    (866 098)   
Differential between carrying values and tax values of intangible assets  (18 878)    (2 947 451)    (2 966 329)   
Right-of-use assets  (999 970)    (284 425)    (1 284 395)   
Lease liabilities  1 135 263     304 821     1 440 084    
Estimated taxation losses  414 539     (6 396)    408 143    
Staff related allowances and liabilities  494 971     (34 065)    460 906    
Inventories  98 820     (799)    98 021    
Investments  18 926     (169 901)    (150 975)   
Trade and other receivables  25 450     1 895     27 345    
Trade, other payables and provisions  291 674     171 942     463 616    
   1 538 254     (3 907 936)    (2 369 682)   

Deferred taxation has been provided at rates ranging between 10% and 45% (2021: 10% and 45%). The variance in rates arises as a result of the differing taxation and capital gains taxation rates present in the various countries in which the Group operates.