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BLUE LABEL
INTEGRATED ANNUAL REPORT 2017
Notes
to the Group annual financial statements
continued
For the year ended 31 May 2017
7.
Taxation
7.1 Income tax expense
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at
year-end in the countries where the Company’s subsidiaries, associates and joint ventures operate and generate
taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in
which applicable tax regulations are subject to interpretation and establishes provisions where appropriate on the
basis of amounts expected to be paid to the tax authorities.
The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to
the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is
also recognised in other comprehensive income or directly in equity respectively.
Uncertain tax positions are considered by the Group at the level of the individual uncertainty or group of related
uncertainties.
Critical accounting estimates and assumptions
As with any enterprise, the Group faces uncertainties in the markets in which it operates and over which it has little
or no control. The Group is subject to income tax in numerous jurisdictions and judgement is required in
determining the provision for tax.
There are transactions and calculations for which the ultimate tax determination is uncertain during the ordinary
course of business. Amounts accrued are based on management’s interpretation of country-specific tax law and the
likelihood of settlement. Where the final tax outcome of these matters is different from the amounts that were
initially recorded, such differences will impact the current income tax and deferred tax provisions in the period in
which such determination is made.
Deferred tax assets are recognised to the extent that it is probable that taxable income will be available in the future
against which these can be utilised. Future taxable income is estimated based on business plans which include estimates
and assumptions regarding economic growth, interest rates, inflation and competitive forces.
2017
R’000
2016
R’000
Current tax
345 990
305 420
Current year
344 739
305 652
Adjustment in respect of prior years
1 251
(232)
Deferred tax
(13 953)
13 363
Current year
(14 667)
14 749
Adjustment in respect of prior years
714
(1 386)
332 037
318 783
Profit before tax
1 152 898
1 050 395
Tax at 28%
322 811
294 111
Fair value adjustments
(1 565)
(10 829)
Expenditure of a capital nature
11 480
9 082
Other income not subject to tax
(11 421)
(5 238)
Other expenses not deductible for tax purposes
4 434
8 090
Tax effect of reclassification of investment in associates and joint
venture to venture capital investment
(44 855)
—
Capital gains tax
2 876
2 431
Tax effect of assessed losses not recognised
130
2 467
Share of losses from associates and joint ventures
46 183
20 096
Adjustment in respect of prior years
1 964
(1 618)
Effect of different tax dispensations
—
191
Tax charge
332 037
318 783
Effective tax rate (%)
29
30