Taxes Paid In The 2018 Financial Year
The Star Entertainment Group is a leading owner and operator of integrated resorts in Australia paying a considerable amount in taxes in Australia, both at a state and federal level. Broadly, taxes paid can be split into two categories, those borne by The Star Entertainment Group on its own behalf which contribute to public finances and those collected by The Star Entertainment Group and remitted to the government on behalf of employees or suppliers.
The table below shows the total of all taxes paid by The Star Entertainment Group in the financial year ending 30 June 2018 (FY2018) in Australia. The Star Entertainment Group’s activity in other countries is not material to its business (less than 1% of accounting profit). Foreign subsidiaries are either dormant or providing marketing services. The Star Entertainment Group’s strategic focus is on domestic growth rather than international expansion. The distribution of taxes paid reflects the geographical spread of The Star Entertainment Group’s businesses.
The effective rate of taxes paid borne by The Star Entertainment Group for the year ended 30 June 2018 is approximately 81% (being corporate and gaming taxes paid divided by accounting profit before these taxes).
Taxes Paid In FY2018 - Contributions
|
|
Contributions $m |
|
|||
|
Level of |
Corporate Income Tax |
Net Gaming taxes and duties |
Employer payroll taxes |
Other taxes |
Total tax payments borne |
|
Australian federal |
100.6 |
1.8 |
102.4 |
||
|
Queensland |
105.7 |
11.4 |
4.4 |
121.5 |
|
|
New South Wales |
265.1 |
17.8 |
7.3 |
290.2 |
|
|
Other states |
0.1 |
0.1 |
|||
|
Australian Total |
100.6 |
370.8 |
31.1 |
11.7 |
514.2 |
Corporate Income Tax
Corporate income tax is payable in instalments throughout the financial year and the ultimate liability is reflected in the income tax return lodged with the ATO or other international tax authorities. The timing of all payments of income tax (instalments and final payments/refunds) in respect of a financial year does not take place within the financial year they relate to. A portion of the tax is paid in the first half of the following financial year. Tax paid in a financial year will therefore include an additional payment or refund in respect of the previous year (see Note F2(iv) of The Star Entertainment Group’s 2018 Annual Report, extract below).
|
|
Collections $m |
|
|
Level of Government |
Employee Paroll taxes |
GST |
|
Australian federal |
163.7
|
129.0
|
|
Other states |
||
|
Australian Total |
163.7
|
129.0
|
Employee payroll taxes
The Star Entertainment Group withholds taxes and superannuation guarantee levy from salaries and wages. These taxes are collected and remitted to federal government and third party superannuation funds.
GST
This is the net amount of goods and services tax collected on sales and purchases from suppliers. These monies are collected and remitted monthly to the government.
ATO Public Disclosure
In late 2019, the Commissioner of Taxation will publicly disclose the following details in respect of The Star Entertainment Group’s income tax return for the year ended 30 June 2018 (the ITR) in its Report of entity tax information.
| Total Income1 | $2,472,564,964 |
| Taxable Income2 | $257,784,010 |
| Income tax payable | $76,780,294 |
Total income
Total income reported in the ITR represents gross income for accounting purposes (i.e. Australian sourced income before expenses are taken into account) plus other income and finance income. Total income is not an indicator of the accounting or taxable profits of an organisation. A table which reconciles The Star Entertainment Group’s total income to accounting profit for the year ended 30 June 2018 illustrates this (right).
Offshore income is subtracted as it is taxed offshore. Offshore profit is subsequently included in taxable income as an assessable income adjustment (ie. Included in the Assessable income adjustment in the reconciliation of profit to taxable income below).
| Revenue3 | $2,471,994,970 |
| Finance Income4 | $1,005,159 |
| Offshore Income | ($435,165) |
| Total Income (per ITR) | $2,472,564,964 |
| Less: Total expenses | ($2,262,359,296) |
| Accounting profit5 | $210,205,668 |
Reconciliation of profit to taxable income
A reconciliation of The Star Entertainment Group’s accounting profit to taxable income for the year ended 30 June 2018, as reported in the ITR, is set out below:
It is not uncommon for Companies to have an effective rate of tax paid that is lower than the Australian corporate tax rate of 30%. In The Star Entertainment Group’s case, there are legitimate reasons as to why The Star Entertainment Group’s effective rate of tax paid may be lower than the Australian corporate rate:
Research & Development (R&D) tax incentive
The Government is trying to encourage companies to undertake R&D activities for the benefit of the Australian economy. This is done through a non-refundable offset. As part of its business strategy The Star Entertainment Group engages in a significant amount of R&D, of which some is entitled to the R&D tax incentive. The offset reduces the tax payable by The Star Entertainment Group and the R&D expenditure is then non-deductible. This provides a permanent benefit of 8.5% of the eligible R&D expenditure (i.e. amount offset exceeds the company tax rate) and a timing benefit.
| Accounting profit | $210,205,668 |
| Add: | |
| Accounting depreciation | 177,811,255 |
| Non-deductible expenses6 | 7,090,564 |
| Other Assessable income | 5,288,868 |
| Subtract: | |
| Tax depreciation | 138,316,470 |
| Non-assessable income | 4,295,875 |
| Taxable income | 257,784,010 |
| Tax on taxable income | 77,335,203 |
| R&D offset | (554,909) |
| Tax payable | 76,780,294 |
| The effective rate of Australian income tax paid by The Star Entertainment Group for the year ended 30 June 2018 is approximately 37% (being tax paid divided by accounting profit). | |
Difference between timing for accounting and tax
The tax law prescribes when certain amounts are taxable and deductible. Although the amounts are the same for accounting and tax, the timing for tax purposes often differs to that recognised for accounting purposes. This gives rise to timing differences.
– ‘Assessable income’ are amounts taxable on a receipts basis for tax purposes which are recognised over a period of time for accounting purposes.
– The difference in depreciation expense for accounting and deduction for tax predominantly relates to depreciation rates.
– Other deductible expenses are a net amount that includes non-deductible items such as entertainment, and the difference in timing of liabilities for expenses (eg. provisions and accruals).
Effective rate of tax paid
The effective rate of Australian income tax paid by The Star Entertainment Group for the year ended 30 June 2018 is approximately 48% (being net tax paid during the year divided by accounting profit). However, as discussed above at Corporate income tax, the timing of all payments of income tax (instalments and final payments/refunds) in respect of a financial year does not take place within the financial year to which they relate. In reality, total tax paid for the 2018 Australian income tax return is $76.8m, or 36.5% of accounting profit.
This is due to a portion of the tax being paid in the first half of the following financial year. The amount of tax payable at 30 June 2018 was $2.1m, which was net of $74.6m instalments paid in the 2018 financial year. In the first half of FY2019 a further $2.2m of tax was paid which related to the FY2018 financial year, being the last instalment, the final balancing payment and refund on lodgement of the return, in accordance with the ATO’s tax payment due dates.
Reconciliation to statutory accounts
Taxable Corporate Taxpayers are required to lodge their tax returns six and a half months after their year-end and The Star Entertainment Group generally releases its Statutory Accounts two months after year end. Consequently, while the tax calculation performed for the Statutory Accounts is materially correct based on enacted tax law at the time it is not same as the lodged tax return. For this reason, a true up adjustment is required for the difference between the tax provision at Statutory Accounts and the tax return (as illustrated in the table below).
Current tax per statutory accounts |
$76,741,757 |
Current tax per ITR |
$76,780,294 |
(Under)/over |
($38,537) |
1 As reported at Item 6(S) of the 2018 ITR
2 As reported at Item 7(T) of the 2018 ITR
3 Refer to Note A2 page 90 of The Star Entertainment Group’s 2018 Annual Report
4 Refer to Note A5 page 91 of The Star Entertainment Group’s 2018 Annual Report
5 Refer to page 84 of The Star Entertainment Group’s 2018 Annual Report, adjusted for profit and losses relating to overseas entities.
6 Sum of amounts reported at Item 7(Z), (W) and (X) of the 2018 ITR, reduced for accounting depreciation shown separately.
