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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
Government

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).

Untitled Document

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.

2016 SHARE SALE FACILITIES

The Star Entertainment Group announced on 5 April 2016 share sale facilities that provided eligible small shareholders the opportunity to sell their shares without incurring any brokerage or handling costs.

Participation in the separate share sale facilities were open to eligible shareholders whose registered address was in Australia or New Zealand as at 7.00pm (Sydney time) on 29 March 2016 (Record Date) and who were:

  1. registered holders of less than a marketable parcel of shares (i.e. less than $500 worth of shares on the Record Date) (Small Holding Sale Facility); or
  2. registered holders of 5,000 or less shares (but held at least $500 worth of shares) on the Record Date (Voluntary Share Sale Facility).

On 5 April 2016, eligible shareholders were sent a letter together with a Share Retention Form (for the Small Holding Sale Facility) or a Sale Instruction Form (for the Voluntary Share Sale Facility), and Terms and Conditions for the relevant share sale facility.

Both share sale facilities closed at 5:00pm (Sydney time) on 17 May 2016 (Closing Date).

All participants who had their SGR shares sold under either the Small Holding Sale Facility or the Voluntary Share Sale Facility received the same average price of $5.51 per share, which was calculated by dividing the total proceeds from the sale of all SGR shares sold under the facilities by the total number of SGR shares sold under the facilities.

Payment of the sale proceeds were made to participating shareholders on 27 May 2016 in accordance with their payment instructions as recorded on the share register.

Small Holding Sale Facility

The Small Holding Sale Facility was conducted in accordance with The Star Entertainment Group’s Constitution and the Australian Securities Exchange Listing Rules that enables all listed companies to sell shareholdings valued at less than $500 (Unmarketable Parcel).

Based on a share price of $5.68, being the closing price of The Star Entertainment Group (SGR) shares on the Australian Securities Exchange on the Record Date, an Unmarketable Parcel was any holding of 88 shares or less.

Eligible shareholders who wished to retain their Unmarketable Parcel were required to return a Share Retention Form to the share registry by the Closing Date.

Small Holding Facility Key Dates:

  • 29 March 2016 (7pm) – Record Date
  • 5 April 2016 – Facility Opened
  • 17 May 2016 (5pm) – Facility Closed
  • 27 May 2016 – Payment of sale proceeds and mailing of payment advices

Voluntary Share Sale Facility

The Voluntary Share Sale Facility was conducted in accordance with Class Order CO 08/10 issued by the Australian Securities and Investment Commission.

Eligible shareholders who wished to sell their shares under the Voluntary Share Sale Facility were required to return a Sale Instruction Form by the Closing Date.

Voluntary Holding Facility Key Dates:

  • 29 March 2016 (7pm) – Record Date
  • 5 April 2016 – Facility Opened
  • 17 May 2016 (5pm) – Facility Closed
  • 27 May 2016 – Payment of sale proceeds and mailing of payment advices

For full details of the Small Holding Sale Facility and the Voluntary Share Sale Facility, please see the ASX Announcement dated 5 April 2016 in the News section of our website.

POST DEMERGER TAX INFORMATION

The demerger of The Star Entertainment Group (formerly known as Echo Entertainment Group Limited) from Tabcorp Holdings Limited (Tabcorp) was implemented on 15 June 2011 by way of Scheme of Arrangement pursuant to the Tabcorp Scheme Booklet dated 15 April 2011 (Demerger).

As part of the Demerger, Tabcorp sought a ruling from the Australian Taxation Office on the taxation implications for shareholders. On 29 June 2011, the Australian Taxation Office issued Class Ruling CR 2011/66, in accordance with the application made by Tabcorp. A copy of the Class Ruling CR 2011/66 can be viewed here.

A Tax Calculator is provided below to assist shareholders in calculating the Australian capital gains tax cost base allocation for Tabcorp shares and The Star Entertainment Group shares. The Tax Calculator is a general guide only and does not constitute tax advice. Shareholders should seek advice from an appropriate professional adviser on the tax implications of the Demerger based on their own individual circumstances.

Click here to download the Tax Calculator
Click here to access information on the Australian Taxation Office website