XML 228 R23.htm IDEA: XBRL DOCUMENT v3.22.2.2
INCOME TAX
 12 Months Ended
Jun. 30, 2022
Income tax [abstract]  
Income tax
18
 
INCOME TAX
SIGNIFICANT ACCOUNTING ASSUMPTIONS AND ESTIMATES
Management periodically evaluates positions taken where tax regulations are subject to interpretation. This includes the
 
treatment
of both Ergo and FWGR as single mining operations respectively, pursuant to the relevant ring-fencing legislation.
The deferred tax liability is calculated by applying
 
a forecast weighted average tax rate that is based
 
on a prescribed formula. The
calculation of the
 
forecast weighted average
 
tax rate requires
 
the use of
 
assumptions and estimates
 
and are inherently
 
uncertain
and could
 
change materially
 
over time.
 
These assumptions
 
and estimates
 
include expected
 
future profitability
 
and timing
 
of the
reversal
 
of the
 
temporary differences.
 
Due to
 
the forecast
 
weighted
 
average tax
 
rate being
 
based on
 
a prescribed
 
formula that
increases the effective tax rate
 
with an increase in
 
forecast future profitability, and vice versa, the
 
tax rate can vary
 
significantly year
on year and can move contrary to current period financial performance.
A
100
 
basis points
 
increase in
 
the effective
 
tax rate
 
will result
 
in an
 
increase in
 
the net
 
deferred tax
 
liability at
 
June 30,
 
2022 of
approximately R
18.7
 
million (2021: R
14.2
 
million; 2020: R
10.3
 
million).
The assessment of the probability that future taxable
 
profits will be available against which the tax losses
 
and unredeemed capital
expenditure can be
 
utilised requires the
 
use of assumptions
 
and estimates and
 
are inherently uncertain
 
and could change
 
materially
over time.
Capital expenditure
 
is assessed
 
by the
 
South African
 
Revenue Service
 
(“
SARS
”) when
 
it is
 
redeemed against
 
taxable mining
 
income
rather
 
than
 
when
 
it
 
is
 
incurred.
 
A
 
different
 
interpretation
 
by
 
SARS
 
regarding
 
the
 
deductibility
 
of
 
these
 
capital
 
allowances
 
may
therefore become evident subsequent to the year of assessment when the capital expenditure is incurred.
ACCOUNTING POLICIES
Income tax expense comprises current and
 
deferred tax. Each company is
 
taxed as a separate entity
 
and tax is not set-off between
the companies.
Current tax
Current tax comprises the expected tax payable or receivable
 
on the taxable income or loss for the
 
year and any adjustment on tax
payable or receivable in respect of the previous year. Amounts are recognised in profit or loss except to the extent that it relates to
items recognised directly in equity
 
or OCI. The current tax
 
charge is calculated on the
 
basis of the tax laws
 
enacted or substantively
enacted at the reporting date.
 
Deferred tax
Deferred
 
tax is
 
recognised in
 
respect
 
of temporary
 
differences
 
between
 
the carrying
 
amounts
 
and
 
the tax
 
bases of
 
assets
 
and
liabilities.
 
Deferred
 
tax
 
is
 
not
 
recognised
 
on
 
the
 
initial
 
recognition
 
of
 
assets
 
or
 
liabilities
 
in
 
a
 
transaction
 
that
 
is
 
not
 
a
 
business
combination and that affects neither accounting nor taxable profit.
Deferred tax assets relating to
 
unutilised tax losses and unutilised capital
 
allowances are recognised to the
 
extent that it is
 
probable
that future taxable profits will be available against which the unutilised tax losses
 
and unutilised capital allowances can be utilised.
The recoverability of these assets is reviewed at each reporting date and adjusted if recovery is no longer probable.
Deferred tax related
 
to gold mining
 
income is measured
 
at a forecast
 
weighted average tax
 
rate that is
 
expected to be
 
applied to
temporary differences when they reverse, using tax rates enacted or substantively enacted
 
at the reporting date. The calculation of
the forecast weighted average
 
tax rate requires the
 
use of assumptions and estimates,
 
including the Group’s life-of-mine
 
plan (as
discussed in note 9 to the consolidated financial statements) that is applied to calculate the expected future profitability.
Current tax on
 
gold mining income
 
for the periods
 
presented was determined
 
based on a
 
formula: Y =
 
34 - 170/X
 
where Y is
 
the
percentage rate
 
of tax
 
payable and
 
X is
 
the ratio
 
of taxable
 
income, net
 
of any
 
qualifying capital
 
expenditure that
 
bears to
 
gold
mining income derived, expressed as a percentage. Non-mining income, which consists primarily
 
of interest accrued, is taxed at a
standard rate of
28
% for the periods presented.
All mining capital expenditure is deducted
 
in the year it is incurred
 
to the extent that it does not
 
result in an assessed loss. Capital
expenditure not deducted from mining income is carried forward as unutilised
 
capital allowances to be deducted from future mining
income.
Amendment in the corporate income tax rate and mining tax rate formula and broadening the tax base
On February
 
23, 2022 the
 
Minister of
 
Finance announced in
 
his budget speech
 
that the corporate
 
income tax
 
(“
CIT
”) rate will
 
be
lowered from
28
% to
27
% for companies with years of assessment commencing on
 
or after April 1, 2022. The mining operations of
the Group accounts for income tax using the gold mining tax formula
 
as opposed to the CIT rate. The gold mining tax formula was
changed to Y
 
= 33 -
 
165/X for years
 
of assessment commencing
 
on or after
 
April 1, 2022.
 
It was further
 
announced that the
 
lowering
of the CIT rate will
 
be implemented alongside additional amendments to
 
broaden the CIT base by
 
limiting interest deductions and
assessed
 
losses.
 
Section
 
23M
 
which
 
limits
 
the
 
deduction
 
of
 
interest
 
payable
 
to
 
certain
 
parties
 
who
 
are
 
not
 
subject
 
to
 
tax
 
was
significantly widened. A maximum of R
1
 
million or
80
% of assessed losses (whichever is greater) is permitted to be set-off against
taxable income.
 
The
 
deferred
 
tax
 
assets
 
and
 
liabilities
 
for
 
the
 
Group
 
have
 
been
 
calculated
 
taking
 
into
 
account
 
the
 
above
 
changes
 
as
 
they
 
are
effective for the financial year and year of assessment commencing July 1, 2022.
Deferred
 
tax is
 
recognised using
 
the gold
 
mining tax
 
formula to
 
calculate a
 
forecast
 
weighted average
 
tax rate
 
considering
 
the
expected timing of the
 
reversal of temporary differences.
 
The formula is calculated
 
as: Y = 33
 
– 165/X where Y
 
is the percentage
rate of tax
 
payable and X
 
is the
 
ratio of taxable
 
income, net of
 
any qualifying capital
 
expenditure that bears
 
to mining income
 
derived,
expressed as a percentage.
Amendment in the corporate income tax rate and mining tax rate formula and broadening the tax base
continued
Due to
 
the forecast
 
weighted average
 
tax rate
 
being based on
 
the expected
 
future profitability,
 
the tax
 
rate can
 
vary significantly
year-on-year and can move contrary to current year financial performance.
 
The forecast
 
weighted average
 
deferred tax
 
rate of
 
Ergo has
 
decreased from
25
% to
22
% as
 
a result
 
of the
 
change in
 
the gold
mining tax
 
formula and increase
 
in the life
 
of mine and
 
increases in operating
 
costs. The forecast
 
weighted average deferred
 
tax
rate of FWGR has decreased from
30
% to
29
% as a result of the change in the gold mining tax formula.
18.1
 
INCOME TAX EXPENSE
Amounts in R million
2022
2021
2020
Current tax
(261.6)
(423.7)
(263.2)
Mining tax
(250.2)
(423.7)
(263.2)
Non-Mining, company and capital gains tax
(11.4)
-
-
Deferred tax
(72.7)
(100.0)
(80.7)
Deferred tax charge - Mining tax
(119.9)
(104.0)
(59.1)
Deferred tax charge - Non-mining, company and capital gains tax
1.6
(19.1)
(2.1)
Deferred tax rate adjustment
45.6
-
(20.7)
Recognition of previously unrecognised tax losses
0.4
7.8
-
(Derecognition of previously recognised)/Recognition of previously unrecognised
tax losses of a capital nature
-
(1.2)
1.2
(Derecognition of previously recognised)/Recognition of previously unrecognised
deductible temporary differences
(0.4)
16.5
-
(334.3)
(523.7)
(343.9)
Tax reconciliation
Major items causing the Group's income tax expense to differ from the statutory rate
were:
Tax
 
on net profit before tax at the South African corporate tax rate of
28
%
(408.3)
(549.9)
(274.1)
Rate adjustment to reflect the actual realised company tax rates applying the
gold mining formula
36.4
3.7
(0.9)
Deferred tax rate adjustment (a)
45.6
-
(20.7)
Depreciation of property, plant and equipment exempt from deferred tax on
 
initial recognition (b)
(22.2)
(21.2)
(21.4)
Non-deductible expenditure (c)
 
(7.3)
(6.2)
(7.9)
Exempt income and other non-taxable income (d)
19.0
22.8
2.4
(Derecognition of previously recognised)/Recognition of previously unrecognised
deductible temporary differences
(0.4)
16.5
-
(Derecognition of previously recognised)Recognition of previously unrecognised
tax losses of a capital nature
-
(1.2)
1.2
Utilisation of tax losses for which deferred tax assets were previously
 
unrecognised
0.4
7.8
-
Current year tax losses for which no deferred tax was recognised
(1.4)
(0.1)
(23.5)
Other items
3.6
3.3
0.4
Tax
 
incentives
0.3
0.8
0.6
Income tax
(334.3)
(523.7)
(343.9)
(a) Deferred tax rate adjustment
 
Ergo’s forecast weighted average deferred tax rate decreased to
22
% (2021: remained unchanged at
25
%; 2020: increased from
22
% to
25
% due to an increase in forecast taxable income of Ergo).
FWGR’s forecast weighted average deferred tax rate decreased to
29
% (2021 and 2020: remained unchanged at
30
%).
(b) Depreciation of property, plant and equipment exempt from deferred tax on initial recognition
Depreciation of R
72.1
 
million (2021: R
68.7
 
million; 2020: R
73.2
 
million) on the
 
fair value of
 
FWGR’s property, plant and equipment
that was exempt from deferred tax on initial recognition in terms of IAS 12
Income Taxes
.
(c) Non-deductible expenditure
The most significant non-deductible expenditure incurred by the Group during the year includes:
R
21.1
 
million discount recognised on Payments made under protest (2021: R
7.4
 
million; 2020: R
7.1
 
million);
●
 
R
17.8
 
million expenditure
 
not incurred
 
in generation
 
of taxable
 
income or
 
capital in
 
nature (2021:
 
R
17.0
 
million; 2020:
 
R
2.7
million);
 
and
●
 
R
5.8
 
million net operating
 
cost related to
 
Ergo Business Development
 
Academy Not for
 
Profit Company that
 
is not deductible
as it is exempt from income tax (2021: R
nil
; 2020: R
14.6
 
million).
(d) Exempt income and other non-taxable income
The most significant exempt income earned by the Group during the year includes:
 
●
 
R
71.5
 
million dividends received (2021: R
76.1
 
million; 2020: R
4.3
 
million);
●
 
R
5.8
 
million unwinding recognised on Payments made under protest (2021: R
4.8
 
million; 2020: R
4.0
 
million); and
●
 
R
nil
 
net operating
 
income related
 
to Ergo
 
Business Development
 
Academy Not
 
for Profit Company
 
that is
 
not taxable
 
as it
 
is
exempt from income
 
tax (2021: R
1.0
 
million; 2020 Ergo
 
Business Development Academy
 
Not for Profit
 
Company incurred net
operating cost that is not deductible as it is exempt from income tax) – refer to (c) non-deductible expenditure.
18.2
 
DEFERRED TAX
Amounts in R million
2022
2021
Included in the statement of financial position as follows:
Deferred tax assets
14.5
5.8
Deferred tax liabilities
(451.9)
(377.1)
Net deferred tax liabilities
(437.4)
(371.3)
Reconciliation of the deferred tax balance:
Balance at the beginning of the year
(371.3)
(265.1)
Recognised in profit or loss
(72.7)
(100.0)
Recognised in other comprehensive income
6.6
(6.2)
Balance at the end of the year
(437.4)
(371.3)
The detailed components of the net deferred tax liabilities which result from the differences between the amounts of assets and
liabilities recognised for financial reporting and tax purposes are:
Amounts in R million
2022
2021
Deferred tax liabilities
Property, plant and equipment (excluding unredeemed capital allowances)
(537.6)
(494.4)
Environmental rehabilitation obligation funds
(63.3)
(60.2)
Other investments
(0.9)
(7.4)
Gross deferred tax liabilities
(601.8)
(562.0)
Deferred tax assets
Environmental rehabilitation obligation
105.6
124.5
Other provisions
49.3
46.7
Other temporary differences
 
1
4.6
14.3
Estimated tax losses
4.1
4.1
Estimated unredeemed capital allowances
0.8
1.1
Gross deferred tax assets
164.4
190.7
Net deferred tax liabilities
(437.4)
(371.3)
1
 
Includes the temporary differences on the lease liability
Deferred tax assets have not been recognised in respect of the following:
Amounts in R million
2022
2021
Estimated tax losses
18.1
16.7
Estimated tax losses - Capital nature
313.6
325.2
Unredeemed capital expenditure
252.0
253.3
Deferred tax
 
assets for
 
tax losses,
 
unredeemed capital
 
expenditure and
 
capital losses
 
have not
 
been recognised
 
where future
taxable profits against
 
which these can
 
be utilised are
 
not anticipated. These
 
do not have
 
an expiry date.
 
A maximum of
 
R
1
 
million
or
80
 
% of assessed losses (whichever is greater) is permitted to be set-off per year against taxable income.