Notes to the financial statements | Note 8.2

8. Taxation
8.2 Deferred taxation
 

Significant accounting judgements, estimates and assumptions

Deferred taxation asset
Management's judgement is exercised when determining the probability of future taxable profits, which will determine whether deferred taxation assets should be recognised or derecognised. The realisation of deferred taxation assets will depend on whether it is possible to generate sufficient taxable income, taking into account any legal restrictions on the length and nature of the taxation asset. When deciding whether to recognise unutilised deferred taxation credits as deferred tax assets, management needs to determine the extent that the future obligations are likely to be available for set-off against the deferred taxation asset. In the event that the assessment of the future obligation and future utilisation changes, the change in the recognised deferred taxation asset is recognised in profit or loss. The carrying amount of the deferred tax asset is reviewed at each reporting date and adjusted to reflect changes in the probability that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Source of estimation uncertainty
Deferred tax assets are recognised for unused tax losses, unused tax credit and deductible temporary differences (as applicable) to the extent that it is probable that future taxable profits will be available against which the deferred tax assets can be used. The Group is required to make significant estimates in assessing whether future taxable profits will be available.

Future taxable profits are determined based on business plans for individual entities in the Group and the probable future reversal of taxable temporary differences. 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. Such reductions are reversed when the probability of future taxable profits improves. In the current year, the Group recognised deferred tax assets amounting to R2 703 million (31 March 2025: R3 736 million).

Based on the five-year business plan, it is envisaged that Telkom will have future taxable profits available against which the deferred tax asset can be used.

  Group Company
  31 March 
2026 
Rm 		 31 March 
2025 
Rm 		 31 March 
2026 
Rm 		 31 March 
2025 
Rm 
Deferred taxation1 2 701  3 637  356  1 029 
Opening balance 3 637  3 873  1 029  1 386 
Profit and loss and opening balance movements (967) (385) (672) (357)
  Capital allowances (759) (891) (436) (420)
  Provisions and other allowances2 106  673  276  351 
  Tax losses (324) (236) (514) (344)
  Overprovision in the prior year 10  69  2  56 
Common control transactions/business combinations 23  9  (7) — 
Sale of Swiftnet —  143  —  — 
Other comprehensive income deferred tax impact 8  (3) 6  — 
         
The balance comprises: 2 701  3 637  356  1 029 
Capital allowances3 (3 057) (2 305) (3 410) (2 966)
Provisions and other allowances2 4 868  4 745  3 442  3 151 
Business combination —  (23) —  — 
Common control transaction (1) —  —  — 
Tax losses4 1 339  1 675  776  1 302 
Other comprehensive income tax impact (448) (455) (452) (458)
         
Deferred taxation balance is made up as follows:1 2 701  3 637  356  1 029 
Deferred taxation assets1 2 703  3 736  356  1 029 
Deferred taxation liabilities (2) (99) —  — 
1 The Group considered the following factors in assessing whether it is probable that the Group will have future taxable profits against which the deferred tax asset (DTA) can be utilised:
  • It is expected that the circumstances resulting in the Group's tax losses will not continue and that no additional tax losses will arise within the foreseeable future.
  • The DTA that arose as a result of the impairment of property, plant and equipment and intangible assets during the 2023 financial year will continue to be utilised within approximately five years through the use of the assets. The commencement of the utilisation in the prior year is evident in the reduction of the DTA attributable to the movement in capital allowances. The utilisation of the assessed loss in the current and prior years is due to the improved profitability of the Group.
2 The increase in provisions and other allowances is mainly driven by the IFRS 16 lease liabilities remeasurements and additions in the current year.
3 The increase in capital allowances is mainly due to the increase in the accounting base of property, plant and equipment and intangible assets as a result of higher acquisitions in the current year.
4 The decrease for Group and Company is mainly due to the utilisation of the tax losses accumulated in the prior years.