Telkom AR front.qxp

Notes to the annual financial statements (continued)
for the three years ended March 31, 2009
Telkom Annual Report 2009 289
2007 2008 2009
Rm Rm Rm
14. DEFERRED TAXATION (990) (1,347) (198)
Opening balance (469) (990) (1,347)
Income statement movements (521) (357) 1,149
Temporary differences (520) (412) 1,255
Capital allowances (467) (446) (310)
Provisions and other allowances (94) 191 199
Capital gains taxation asset – – 1,279
Secondary taxation credits raised/(utilised) 41 (157) 87
Underprovision prior year (1) – (106)
Change in taxation rate – 55 –
The balance comprises: (990) (1,347) (198)
Capital allowances (2,527) (2,870) (3,181)
Provisions and other allowances 1,197 1,340 1,434
Capital gains taxation asset – – 1,279
STC taxation credits 340 183 270
Deferred taxation balance is made up as follows: (990) (1,347) (198)
Deferred taxation assets 340 183 1,549
Deferred taxation liabilities (1,330) (1,530) (1,747)
Unutilised STC credits 2,718 1,830 2,700
Secondary taxation on companies (STC) is provided for at a rate of 10% on the amount by which dividends declared by the Company
exceeds dividends received. The deferred taxation asset is raised as it is probable that it will be utilised in future. The asset will be released
as a taxation expense when dividends are declared.
The deferred taxation asset represents STC credits on past dividends received that are available to be utilised against dividends declared.
The deferred taxation asset also includes deferred tax on capital gains tax (CGT) base cost of the Vodacom Group (Proprietary) Limited
and Swiftnet (Proprietary) Limited (Swiftnet) investments that will be utilised against the future CGT liability on the Vodacom and Swiftnet
transactions. It is considered probable that these credits will be utilised in the future. The asset will be released as a taxation expense when
dividends are declared and when the CGT liability arises.
The deferred taxation liability increased mainly due to the increase in the difference between the carrying value and taxation value of
assets, as a result of the change in the estimate of useful lives of assets.