AGRIBEL HOLDINGS LTD FINANCIAL REVIEW 2021
Deferred tax Provision is made for deferred tax using the liability method on temporary differences arising between the tax base of assets and liabilities and their carrying values for purposes of financial reporting , at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled , applying the tax rate enacted at the reporting date . The liability for deferred tax or deferred tax assets is adjusted for any changes in the income tax rate .
Deferred tax assets arising from all deductible temporary differences are limited to the extent that probable future taxable income will be available against which the temporary differences can be charged .
The carrying amounts of deferred income tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised . Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable income will allow the deferred tax asset to be recovered .
Deferred tax shall be recognised outside profit and loss if the tax relates to items , in the same or different period , outside profit or loss . Therefore if items are recognised in other comprehensive income the deferred tax should be recognised in other comprehensive income and if items are recognised directly in equity the deferred tax should be recognised directly in equity .
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority .
Value added tax Revenue , expenses and assets are recognised net of the amount of value added tax except :
Where the value added tax incurred on a purchase of assets or services is not recoverable from the taxation authority , in which case the value added tax is recognised as part of the expense item as applicable ; and Receivables and payables that are stated with the amount of value added tax included .
2.10 Post – employment benefits 2.10.1 Retirement liability
The retirement liability comprises a defined contribution fund registered in terms of the Pension Funds Act , 1956 , and the assets are administered separately by trustees . Funding is in terms of conditions of employment by means of contributions by the company , participating subsidiaries , as well as employees . Contributions are recognised in profit or loss in the period in which the employees rendered the related services . As the funds are defined contribution funds , any underfunding that may occur when the value of the assets decrease below that of the contributions , is absorbed by the employees by means of decreased benefits . The group therefore has no additional exposure in respect of the retirement liability .
2.11 Employee benefits Short-term Short-term employee benefits are employee benefits ( other than termination benefits ) that are expected to be settled wholly before twelve months after the end of the annual reporting period in which the employees render the related services .
These include normal benefits such as salaries , wages , paid leave , paid sick leave , profit-sharing and other bonuses as well as fringe benefits in respect of existing employees , and are charged to profit and loss in the period in which they occurred .
An accrual is raised for the expected costs of incentive bonuses where a legal or constructive obligation exists , an accurate estimate of the obligation can be made and the obligation is expected to be settled within twelve months after the end of the period in which the employees rendered the related services .
An accrual is raised for the undiscounted expected cost of the obligation where the obligation is due to be settled within twelve months after the end of the period in which the employees rendered the related employee services . The provision is for both normal leave days and long-service leave days accumulated , converted to a rand value at year-end , based on the cash equivalent thereof . The required adjustment is recognised in profit or loss .
An accrual is raised for normal thirteenth cheque bonuses accrued , as a pro rata-payout is made where resignation occurs prior to the employee ’ s normal elected date of payout .
76 AGRIBEL ANNUAL FINANCIAL REVIEW 2021 Agribel Holdings Limited Reg nr : 1996 / 017629 / 06