| Growthpoint converted to a REIT, with effect from 1 July 2013. Section 25BB of the Income Tax Act allows for the deduction of the qualifying
distribution paid to shareholders, but the deduction is limited to taxable income. To the extent that no tax will be payable in future as a result of
the qualifying distribution, no deferred tax was raised on items such as the straight-line lease income adjustment and the fair valuation of non-current
financial liabilities.
IAS 12 Income taxes (amended) requires the sale rate to be applied, unless rebutted, when calculating deferred tax on the fair value adjustments
on investment property. After the conversion to a REIT, capital gains taxation is no longer applicable on the sale of investment property in terms
of section 25BB of the Income Tax Act. The deferred tax rate applied to investment property at the sale rate will therefore be 0%. Consequently,
no deferred tax was raised on the fair value adjustments on investment property.
Allowances relating to immovable property can no longer be claimed and if a REIT sells immovable property, the allowances claimed in previous
years will be recouped. A deferred tax liability was raised in this respect.
The deferred tax liability on the intangible asset relates to the right to manage the property assets.
The deferred tax on the investment in GOZ is based on the presumption that the investment will be realised through sale and capital gains tax will
be payable in Australia. |