AFRICAN DAWN ANNUAL REPORT 2017 49 Accounting Policies continued 2017 & 2016 All loans were attracting market related rates during the year so no present value adjustments were made. The interest rates that has been applied in the discounting is an effective interest rate of 11,44% (2016: 11.19%). Change in estimate – interest and penalties on income tax and VAT liability As disclosed in the prior year financial statements an estimate was made of the current tax and VAT liabilities relating to Afdawn, Elite and Bhenka, plus the related interest and penalties that would be due to SARS. However, as a result of the section 200 application to SARS being declined in May 2015 (refer to note 12), additional interest and penalties of R0,842 million income tax + R0,252 million VAT (2016: R0,938 million) were due. R0,434 million (2016: R2,808 million) of the amount relates to VAT and is recognised as an additional VAT liability in note 20 and R0,842 (2016: R2,710 million) of this relates to current income tax and is recognised as an additional current tax liability refer to note 12. This has been accounted for as a change in accounting estimate and recognised in full in the current year. The total group liabilities (including penalties and interest) are as follows: * VAT - R4,703 million (2016: R5,938 million (refer to note 20) * Current tax – R16,280 million (2016: 15,054 million (refer to note 12).
AFRICAN DAWN 2017
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