Taxation Paid FY 2019 – The Star Entertainment Group

Taxes Paid In The 2019 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 2019 (FY2019) 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 2019 is approximately 67% (being corporate and gaming taxes paid divided by accounting profit before these taxes).

Taxes Paid In FY2019 - 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	67.8		1.3		69.1
Queensland		111.0	11.9	5.2	128.1
New South Wales		249.7	18.9	7.0	275.6
Other states			0.2		0.2
Australian Total	67.8	360.7	32.3	12.2	473.0

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 2019 Annual Report, extract below).

Gaming taxes

The Star Entertainment Group pays gaming taxes and levies in respect of its casino operations in both New South Wales and Queensland. A percentage of gaming taxes paid by The Star Entertainment Group are directed to community benefit funds. These funds are allocated by the relevant state governments to projects benefiting the community such as grants to non-profit community organisations, the provision of problem gambling counselling services and initiatives designed to reduce problem gambling behaviour in communities. A portion of the taxes is also directed to National Gambling Help Line services.

The amounts disclosed in the Taxes paid in FY2019 – Contributions table are net of GST deductions/offsets. For completeness, gross gaming tax amounts are reported where appropriate in other forums including publications and presentations.

Employer payroll taxes

With a workforce of more than 9,000 employees across New South Wales and Queensland, payroll and employer taxes paid in respect of employees are significant. This includes taxes such as payroll tax and fringe benefits tax.

Other taxes

The Star Entertainment Group pays other taxes such as property taxes and car parking levies.

	Collections $m
Level of Government	Employee Paroll taxes	GST
Australian federal	178.0	145.4
Other states
Australian Total	178.0	145.4

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 2020, 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 2019 (the ITR) in its Report of entity tax information..

Total Income¹	$2,169,970,974
Taxable Income²	$283,391,912
Income tax payable	$85,017,574

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 2019 illustrates this (right).

Income earned by offshore entities comprises service fee income for services provided to Australia and finance income. For accounting purposes service fee income its eliminated, accordingly the adjustment for offshore income represents offshore finance income is subtracted as it is taxed offshore. This income along with service fee income earned by the foreign entities is 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	$2,158,082,289
Other Income⁴	$11,480,558
Finance Income⁵	$422,728
Offshore Income	($14,600)
Total Income (per ITR)	$2,169,970,974
Less: Total expenses	($1,892,042,927)
Accounting profit⁶	$277,928,048

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 2019, 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:

Accounting profit	$277,928,048
Add:
Accounting depreciation	$205,793,616
Other Assessable income	$5,739,972
Subtract:
Tax depreciation	$161,762,619
Other deductible expenses⁷	$28,255,229
Non-assessable income	$16,051,876
Taxable income	$283,391,912
Tax on taxable income	$85,017,574
Tax payable	$85,017,574
The effective rate of Australian income tax paid by The Star Entertainment Group for the year ended 30 June 2019 is approximately 24% (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 2019 is approximately 24% (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 2019 Australian income tax return is $85.0m, or 30.6% 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 2019 was $18.4m, which was net of $65.8m instalments paid in the 2019 financial year. In the first half of FY2020 a further $18.7m of tax was paid which related to the FY2019 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	$84,242,439
Current tax per ITR	$85,017,574
(Under)/over	($775,135)

¹ As reported at Item 6(S) of the 2019 ITR

² As reported at Item 7(T) of the 2019 ITR

³ Refer to Note A2 page 87 of The Star Entertainment Group’s 2019 Annual Report

⁴ Refer to Note A3 page 87 of The Star Entertainment Group’s 2019 Annual Report

⁵ Refer to Note A5 page 88 of The Star Entertainment Group’s 2019 Annual Report

⁶Refer to page 81 of The Star Entertainment Group’s 2019 Annual Report, adjusted for income and expenses relating to overseas entities.

⁷Sum of amounts reported at Item 7(Z), (W) and (X) of the 2019 ITR, reduced for accounting depreciation shown separately.

Taxes Paid In The 2019 Financial Year

Taxes Paid In FY2019 - Contributions

Corporate Income Tax

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