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Income Tax
 12 Months Ended
Jun. 30, 2024
Income Tax [Abstract]  
Income Tax
18.
 
INCOME TAX
Income tax expense
The table
 
below presents
 
the components
 
of (loss)
 
income before
 
income taxes
 
expense (benefit)
 
for the
 
years ended
 
June 30,
2024, 2023 and 2022:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2024
2023
2022
South Africa
$
(4,405)
$
(21,308)
$
(31,266)
United States
(8,705)
(10,755)
(8,509)
Liechtenstein
-
-
(509)
Other
312
(203)
384
Loss before income tax expense (benefit)
$
(12,798)
$
(32,266)
$
(39,900)
18.
 
INCOME TAX (continued)
Income tax expense (continued)
Presented below
 
is income tax
 
expense (benefit)
 
by location of
 
the taxing
 
jurisdiction for the
 
years ended
 
June 30, 2024,
 
2023
and 2022:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2024
2023
2022
Current tax expense
$
5,766
$
6,317
$
2,309
South Africa
5,634
6,317
2,309
Other
132
-
-
Deferred tax expense (benefit)
(2,712)
(7,442)
(2,044)
South Africa
(2,716)
(7,490)
(2,154)
Other
4
48
110
Foreign tax credits generated – United States
309
115
62
Change in tax rate – South Africa
-
(1,299)
-
Income tax expense (benefit)
 
$
3,363
$
(2,309)
$
327
There were
no
 
changes to the
 
enacted income tax
 
rate in the
 
years ended June
 
30, 2024 and
 
2022 in any
 
of our major
 
jurisdictions.
The South African corporate
 
income tax rate reduced
 
from
28
% to
27
%, effective from
 
July 1, 2022, for all
 
of the Company’s
 
South
African subsidiaries with
 
income tax years
 
commencing on July
 
1, 2022. The
 
change in the
 
income tax rate
 
was enacted on
 
January
5, 2023, and accordingly all deferred taxes assets and liabilities were remeasured to the new tax rate on
 
that date. This resulted. in the
inclusion of an
 
income tax benefit
 
of $
1.3
 
million in the Company’s
 
income tax expense
 
(benefit) line in
 
its consolidated statements
of operations for the
 
year ended June
 
30, 2023, as
 
a result of
 
the reversal of
 
a portion of
 
the deferred tax
 
assets and liabilities
 
recognized
as of December 31, 2022.
The Company’s current tax expense for the year ended June 30, 2024, was lower than the previous year due to the lower taxable
income generated by the Company’s
 
subsidiaries during the year ended June 30, 2024, compared with the year ended June
 
30, 2023.
The Company’s deferred tax expense (benefit) for the year ended June
 
30, 2024, was lower compared with the
 
previous year due
to the
 
inclusion of
 
the deferred
 
tax benefit
 
recorded during
 
the year
 
ended June
 
30, 2023,
 
related to
 
the amortization
 
of intangible
assets recognized
 
due to
 
the acquisition
 
of Connect.
 
Deferred tax
 
expense (benefit)
 
for the
 
year ended
 
June 30,
 
2024, also
 
includes
lower prepaid
 
expense balances
 
as of
 
June 30,
 
2024 which
 
reduces
 
the
 
deferred
 
tax benefit.
 
The Company’s
 
deferred tax
 
expense
(benefit) for the year ended June 30, 2023, was higher
 
than the previous year due to the inclusion of the deferred tax benefit
 
recorded
during the year ended June 30, 2023, related to the amortization of intangible assets recognized due to
 
the acquisition of Connect. The
amount for the
 
year ended
 
June 30,
 
2023, also includes
 
a deferred tax
 
benefit related to
 
an expense
 
paid by
 
Connect before the
 
Company
acquired the business and which was subsequently determined to be deductible
 
for tax purposes of approximately $
2.0
 
million.
 
During the years
 
ended June 30,
 
2024, 2023 and
 
2022, the Company
 
incurred net operating
 
losses through certain
 
of its South
African wholly-owned
 
subsidiaries and recorded
 
a deferred tax
 
benefit related to
 
these losses. However,
 
the Company
 
has created a
valuation allowance for certain of these net operating losses which reduced
 
the deferred tax benefit recorded.
A reconciliation
 
of income
 
taxes, calculated
 
at the
 
fully-distributed South
 
African income
 
tax rate
 
to the
 
Company’s
 
effective
tax rate, for the years ended June 30, 2024, 2023 and 2022, is as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2024
2023
2022
Income taxes at South African income tax rates
27.00
%
27.00
%
28.00
%
Non-deductible interest expense
(24.55)
%
-
 
-
 
-
 
-
 
Movement in valuation allowance
(22.15)
%
(17.66)
%
(22.05)
%
Non-deductible transaction costs
(5.91)
%
-
 
-
 
-
 
-
 
Capital gains tax rate differential
1.62
%
(0.51)
%
0.11
%
Prior year adjustments
(1.37)
%
7.60
%
0.01
%
Non-deductible items
(1.11)
%
(13.28)
%
(6.59)
%
Foreign tax credits
0.19
%
-
-
Foreign tax rate differential
-
(0.02)
%
0.02
%
Change in tax laws – South Africa
-
4.03
%
-
Release from FCTR
-
-
(0.33)
%
Effective tax rate
(26.28)
%
7.16
%
(0.83)
%
18.
 
INCOME TAX (continued)
Income tax expense (continued)
Percentages included in
 
the 2024
 
and 2022 columns
 
in the
 
reconciliation of income
 
taxes presented above
 
are specifically impacted
by the loss incurred by the
 
Company during the years ended June
 
30, 2024 and 2022. For instance,
 
for the year ended June 30, 2024,
income tax expense of $
3.4
 
million represents (
26.28
%) multiplied by the loss before tax expense (benefit) of $(
12,798
).
 
Movement in the
 
valuation allowance for
 
the year
 
ended June
 
30, 2024, includes
 
allowances created related
 
to certain net
 
operating
loss carryforwards generated during
 
the year. Non-deductible
 
items for the year ended June
 
30, 2024, includes transactions costs
 
and
interest expense incurred which the Company cannot deduct for income
 
tax purposes
Movement in the
 
valuation allowance for
 
the year
 
ended June
 
30, 2023, includes
 
allowances created related
 
to certain net
 
operating
losses
 
incurred
 
during
 
the
 
year.
 
Non-deductible
 
items
 
for
 
the
 
year
 
ended
 
June
 
30,
 
2023,
 
includes
 
the
 
goodwill
 
impairment
 
loss
recognized and interest expense incurred which the Company cannot deduct
 
for income tax purposes.
Movement in the valuation allowance
 
for the year ended
 
June 30, 2022, includes
 
allowances created related to
 
net operating losses
incurred during the
 
year. Non-deductible items for
 
the year ended
 
June 30,
 
2022, includes the
 
transaction costs related
 
to the acquisition
of Connect.
Deferred tax assets and liabilities
Deferred
 
taxes
 
reflect
 
the
 
temporary
 
differences
 
between
 
the financial
 
statement
 
carrying
 
amount
 
and
 
tax
 
bases
 
of
 
assets and
liabilities using
 
enacted tax
 
rates in effect
 
for the year
 
in which the
 
differences are
 
expected to reverse.
 
The primary
 
components of
the temporary differences and carryforwards that gave rise to the Company’s deferred tax assets and liabilities as of June 30, and their
classification, were as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
June 30,
June 30,
2024
2023
Total
 
deferred tax assets
Equity accounted investments and equity investments
$
38,039
$
36,267
Net operating loss carryforwards
42,025
39,486
Foreign tax credit carryforwards
32,527
32,599
Provisions and accruals
3,294
3,165
FTS patent
-
40
Other
4,494
4,217
Total
 
deferred tax assets before valuation allowance
120,379
115,774
Valuation
 
allowances
(114,687)
(109,120)
Total
 
deferred tax assets, net of valuation allowance
5,692
6,654
Total
 
deferred tax liabilities:
Intangible assets
29,918
32,731
Equity investments
10,354
10,354
Other
102
94
Total
 
deferred tax liabilities
40,374
43,179
Reported as
Long-term deferred tax assets, net
3,446
10,315
Long-term deferred tax liabilities, net
38,128
46,840
Net deferred tax liabilities
$
34,682
$
36,525
Decrease in total net deferred tax liabilities
Equity-accounted investments and equity investments
Equity-accounting investments and equity
 
investments as of
 
June 30, 2024
 
and 2023, comprises
 
the temporary differences arising
from the
 
difference
 
between the
 
amount paid
 
for Cell
 
C in
 
August 2017
 
and the
 
its financial
 
statements carrying
 
amount as
 
of the
respective
 
year
 
end,
 
of $
0.0
 
million,
 
difference
 
between
 
the amount
 
paid
 
for CPS
 
in 2004
 
and
 
the its
 
financial
 
statement carrying
amount as of the respective
 
year end, of $
0.0
 
million, and temporary differences
 
arising from the disposal of
 
Finbond which resulted
in the generation of capital loss carryforwards.
 
The change in Equity-accounting investments and equity investments also includes the
impact of currency changes between the South African Rand against the United
 
States dollar.
 
18.
 
INCOME TAX (continued)
Deferred tax assets and liabilities (continued)
Decrease in total net deferred tax liabilities (continued)
Net operating loss carryforwards
Net operating loss carryforwards have increased due
 
to losses incurred by certain of the Company’s
 
subsidiaries and the impact
of currency
 
changes between
 
the South
 
African
 
Rand against
 
the United
 
States dollar,
 
which
 
was partially
 
offset
 
by net
 
operating
losses carryforwards forfeited following the substantial liquidation
 
of certain of the Company’s subsidiaries.
Intangibles assets
Intangible assets include intangible assets recognized related to the acquisition of Connect during the year ended June 30,
2022 (refer to Note 3) and have decreased compared to June 30, 2023,
 
due to the amortization of the intangible assets.
Equity investments
Investment
 
includes
 
our
 
investment
 
in
 
MobiKwik
 
(refer
 
to
 
Note
 
9),
 
and
 
there
 
were
 
no
 
adjustments
 
to
 
the
 
carrying
 
value
 
of
investment in MobiKwik during the year ended June 30, 2024.
Increase in valuation allowance
At June
 
30,
 
2024,
 
the Company
 
had
 
deferred
 
tax assets
 
of $
5.7
 
million
 
(2023:
 
$
6.7
 
million),
 
net of
 
the valuation
 
allowance.
Management believes,
 
based on
 
the weight
 
of available
 
positive and
 
negative evidence
 
it is
 
more likely
 
than not
 
that the
 
Company
will realize
 
the benefits
 
of these
 
deductible temporary
 
differences and
 
carryforwards, net
 
of the
 
valuation allowance.
 
However,
 
the
amount of the deferred tax asset considered realizable could be adjusted
 
in the future if estimates of taxable income are revised.
At June
 
30, 2024,
 
the Company
 
had a
 
valuation allowance
 
of $
114.7
 
million (2023:
 
$
109.1
 
million) to
 
reduce its
 
deferred tax
assets to
 
the estimated
 
realizable
 
value. The
 
movement
 
in the
 
valuation
 
allowance for
 
the years
 
ended June
 
30, 2024
 
and
 
2023, is
presented below:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
Equity-
accounting
investments
and equity
investments
Net operating
loss carry-
forwards
Foreign tax
credit carry-
forwards
Other
July 1, 2022
$
117,101
$
42,587
$
39,652
$
32,671
$
2,191
Charged to statement of operations
5,916
5
5,492
-
419
Reversed to statement of operations
(1,701)
-
(579)
(510)
(612)
Change in tax rate - South Africa
(2,351)
(1,190)
(1,161)
-
-
Foreign currency adjustment
(9,845)
(5,135)
(5,023)
438
(125)
Net change in the valuation allowance
(7,981)
(6,320)
(1,271)
(72)
(318)
June 30, 2023
109,120
36,267
38,381
32,599
1,873
Charged to statement of operations
5,061
665
3,163
-
1,233
Reversed to statement of operations
(1,865)
-
(1,793)
(72)
-
Foreign currency adjustment
2,371
1,107
1,215
-
49
Net change in the valuation allowance
5,567
1,772
2,585
(72)
1,282
June 30, 2024
$
114,687
$
38,039
$
40,966
$
32,527
$
3,155
Net operating loss carryforwards and foreign tax credit carryforwards
South Africa
Net operating loss
 
carryforwards generated
 
in South Africa are
 
carried forward indefinitely,
 
but the loss carryforward
 
that may
be used against future taxable income is limited to 80% of taxable income before
 
the net operating loss deduction.
 
18.
 
INCOME TAX (continued)
Deferred tax assets and liabilities (continued)
Net operating loss carryforwards and foreign tax credit carryforwards (continued
United States
Net operating
 
loss carryforwards
 
generated in
 
the United States
 
are carried
 
forward indefinitely,
 
but the loss
 
carryforward that
may be used against future taxable income is limited to 80% of taxable
 
income before the net operating loss deduction.
Lesaka had
no
 
net unused foreign
 
tax credits
 
that are more
 
likely than
 
not to
 
be realized as
 
of June
 
30, 2024 and
 
2023, respectively.
Unrecognized tax benefits
As of June 30, 2023 and 2024, the Company had
no
 
unrecognized tax benefits. The Company files income tax returns mainly in
South Africa,
 
Botswana, Namibia and in the U.S. federal jurisdiction. As of June 30, 2024, the Company’s South African subsidiaries
are no longer
 
subject to income
 
tax examination by the
 
South African Revenue Service
 
for periods before
 
June 30, 2020.
 
The Company
is subject to
 
income tax
 
in other
 
jurisdictions outside
 
South Africa,
 
none of which
 
are individually
 
material to its
 
financial position,
statement of cash flows, or results of operations.