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Income Tax | 12 Months Ended
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Jun. 30, 2023
Income Tax [Abstract] |
Income Tax | 18. INCOME TAX Income tax provision The table below presents the components of (loss) income before income taxes for the years ended June 30, 2023, 2022 and 2021: 2023 2022 2021 South Africa $ (21,308) $ (31,266) $ (30,825) United States (10,755) (8,509) (6,686) Liechtenstein - (509) (810) Other (203) 384 32,702 Loss before income taxes $ (32,266) $ (39,900) $ (5,619) 18. INCOME TAX (continued) Income tax provision (continued) Presented below is the provision for income taxes by location of the taxing jurisdiction for the years ended June 30, 2023, 2022 and 2021: 2023 2022 2021 Current income tax expense (benefit) $ 6,317 $ 2,309 $ 859 South Africa 6,317 2,309 866 United States - - (75) Other - - 68 Deferred taxation (benefit) charge (7,442) (2,044) 6,691 South Africa (7,490) (2,154) (2,039) United States - - 9,136 Other 48 110 (406) Foreign tax credits generated – United States 115 62 10 Income tax (benefit) provision $ (2,309) $ 327 $ 7,560 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 have been remeasured to the new tax rate. This has resulted in the inclusion of an income tax benefit of $ 1.3 million in the Company’s income tax (benefit) expense line in its consolidated statements of operations for each of 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. There were no changes to the enacted tax rates in the years ended June 30, 2022 and 2021. The Company’s current income tax expense for the year ended June 30, 2023, was higher than the previous year due to the acquisition of Connect, which is profitable and generates taxable income. The Company’s deferred taxation (benefit) charge for the year ended June 30, 2023, was higher than the previous year due to the inclusion of the deferred tax benefit recorded 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 subsequently determined to be deductible for tax purposes of approximately $ 2.0 million. During the years ended June 30, 2023, 2022 and 2021, the Company incurred net operating losses through certain of its South African wholly-owned subsidiaries and recorded a deferred taxation benefit related to these losses. However, the Company has created a valuation allowance for certain of these net operating losses which reduced the deferred taxation 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, 2023, 2022 and 2021, is as follows: 2023 2022 2021 Income taxes at fully-distributed South African tax rates 27.00 % 28.00 % 28.00 % Movement in valuation allowance (17.66) % (22.05) % (250.16) % Prior year adjustments 7.60 % 0.01 % 1.77 % Foreign tax rate differential (0.02) % 0.02 % 51.21 % Change in tax laws – South Africa 4.03 % - - - - Non-deductible items (13.28) % (6.59) % (58.40) % Capital gains differential (0.51) % 0.11 % 93.03 % Release from FCTR - - (0.33) % - - Income tax provision 7.16 % (0.83) % (134.55) % Percentages included in the 2022 and 2021 columns in the reconciliation of income taxes presented above are specifically impacted by the loss incurred by the Company during the year ended June 30, 202 2 and 2021. For instance, for the year ended June 30, 2022, the income tax provision of $ 0.3 million represents ( 0.83 %) multiplied by the net loss before tax of $( 39,900 ). 18. INCOME TAX (continued) Income tax provision (continued) 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. Movement in the valuation allowance for the year ended June 30, 2021, includes allowances created related to net operating losses incurred during the year. Non-deductible items for the year ended June 30, 2021, includes the impact of the allowance for doubtful loans to equity -accounted investments created . The foreign tax rate differential relates primarily to the difference between the fully- distributed South African income tax rate and the rate used ( 21 %) to measure the deferred tax liability created related to the fair adjustment to the Company’s investment in MobiKwik (refer to Note 9). The capital gains differential for the year ended June 30, 2021, represents the impact of the reversal of the deferred tax liability related to one of the Company’s equity-accounted investments following its impairment (refer to Note 9). Deferred tax assets and liabilities Deferred income taxes reflect the temporary differences between the financial reporting 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 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, 2023 2022 Total deferred tax assets Capital losses related to investments $ 36,267 $ 42,587 Net operating loss carryforwards 39,486 40,384 Foreign tax credits 32,599 32,671 Provisions and accruals 3,165 3,163 FTS patent 40 95 Other 4,217 2,063 Total deferred tax assets before valuation allowance 115,774 120,963 Valuation allowances (109,120) (117,101) Total deferred tax assets, net of valuation allowance 6,654 3,862 Total deferred tax liabilities: Intangible assets 32,731 43,876 Investments 10,354 10,354 Other 94 67 Total deferred tax liabilities 43,179 54,297 Reported as Long-term deferred tax assets 10,315 3,776 Long-term deferred tax liabilities 46,840 54,211 Net deferred income tax liabilities $ 36,525 $ 50,435 Increase in total net deferred income tax liabilities Capital losses related to investments Capital losses as of June 30, 2023 and 2022, comprises the capital loss arising from the difference between the amount paid for Cell C in August 2017 and the its fair value as of the respective year end, of $ 0.0 million, and difference between the amount paid for CPS in 2004 and the its fair value as of the respective year end, of $ 0.0 million. The change in capital losses related to investments relates primarily to 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) Increase in total net deferred income 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). 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, 2023. Decrease in valuation allowance At June 30, 20223, the Company had deferred tax assets of $ 6.7 million (2022: $ 3.9 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 differences, 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, 2023, the Company had a valuation allowance of $ 109.1 million (2022: $ 117.1 million) to reduce its deferred tax assets to estimated realizable value. The movement in the valuation allowance for the years ended June 30, 2023 and 2022, is presented below: Total Capital losses related to investments Net operating loss carry- forwards Foreign tax credits Other July 1, 2021 $ 118,777 $ 47,518 $ 36,270 $ 32,737 $ 2,252 Charged to statement of operations 8,119 195 7,647 - 277 Reversed to statement of operations (301) - (167) (66) (68) Utilized (1) - (1) - - Foreign currency adjustment (9,493) (5,126) (4,097) - (270) June 30, 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) June 30, 2023 $ 109,120 $ 36,267 $ 38,381 $ 32,599 $ 1,873 Net operating loss carryforwards and foreign tax credits South Africa Net operating loss generated are carried forward indefinitely, however, South Africa has recently enacted legislation similar to the United States which limits the loss carryforward that may be used against future taxable income to 80% of taxable income before the net operating loss deduction. 18. INCOME TAX (continued) Deferred tax assets and liabilities (continued) Decrease in valuation allowance (continued) United States Net operating loss generated 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. As of June 30, 2023, Lesaka had net operating loss carryforwards that will expire, if unused, as follows: Year of expiration U.S. net operating loss carry forwards 2024 $ 775 Lesaka had no net unused foreign tax credits that are more likely than not to be realized as of June 30, 2023 and 2022, respectively. Uncertain tax positions As of June 30, 2023 and 2022, the Company had no unrecognized tax benefits which would impact the Company’s effective tax rate. The Company files income tax returns mainly in South Africa, Botswana, Namibia and in the U.S. federal jurisdiction. As of June 30, 2023, 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, 2019. 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. The Company does not expect the change related to unrecognized tax benefits will have a significant impact on its results of operations or financial position in the next 12 months.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI https://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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