Taxation & Transparency
The Star Entertainment Group takes pride in its leadership role in the gaming and entertainment industry in Australia and embraces a culture of social responsibility, ethical behaviour and community engagement to support and promote sustainable business practices. This culture is reflected in a partnership approach that includes working with industry, government, community and other stakeholders. The Star Entertainment Group operates in a highly regulated industry and is committed to managing all taxes in a responsible manner with regard to the commercial and social imperatives for the long-term sustainability of our business and stakeholders.
The Star Entertainment Group’s Tax Corporate Governance framework outlines the Group’s intention to manage all our taxes in compliance with the spirit of tax laws and our core values. We also strive to maintain a proactive and positive relationship with the Australian Tax Office (ATO) and other regulatory authorities through regular, open and transparent dialogue.
The Star Entertainment Group is proud of its contribution to the Australian economy and recognises our tax contributions are important to public finances and the social programs they fund.
Taxes paid in the 2020 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.
Impact of COVID-19
The COVID-19 outbreak was declared a pandemic by the World Health Organization in March 2020. The response of governments in dealing with the pandemic has impacted the general activity levels within the community, the economy, and the operations of The Star Entertainment Group. On 23 March 2020, following government directives, The Star Entertainment Group’s properties in Sydney, Gold Coast and Brisbane:
- ceased gaming activities;
- closed food and beverage, banqueting and conferencing offerings with the limited exception of in-room dining services for hotel guests; and
- significantly reduced the capacity of its hotel accommodation services.
Due to government directed closures of The Star Entertainment Group’s properties, more than 95% of the almost 9,000 staff had to be temporarily stood down.
The Star Sydney reopened from 1 June 2020, albeit at significantly reduced capacity for the remainder of financial year ended 30 June 2020 (FY2020). As a result of COVID-19, the border closures and other restrictions imposed by governments had a significant impact on the financial results for FY2020. The Queensland properties reopened from 3 July 2020, subsequent to year end, under reduced capacity restrictions.
At 30 June 2020 approximately 30% of the workforce remained stood down.
In response to the adverse impact of COVID-19 on businesses and the economy the Australian Federal and State Governments provided some financial relief, by way of the JobKeeper wage subsidy, payment deferrals and in some instance’s waivers of tax contributions.
Contributions, Deferred Contributions, Collections and JobKeeper
The table below shows the total of all taxes paid by The Star Entertainment Group in FY2020 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 2020 is approximately 215% (being corporate and gaming taxes paid divided by accounting profit before these taxes).
Taxes Paid In FY2020 – Contributions
|Level of Government||Corporate Income Tax||Gaming taxes and duties||Employer payroll taxes||Other taxes and payments||Total tax payments borne ($m)|
|Australian Federal Government||19.6||1.4||21.0|
|New South Wales Government||176.9||13.7||2.9||193.5|
|Other State Governments||0.2||0.2|
Taxes deferred in FY2020 – Deferred ContributionsThe table below summarises the deferred tax contributions to be paid by The Star Entertainment Group in FY2021 with the exception of Queensland payroll tax which is payable across both FY2021 and FY2022. In addition, the Queensland Government also refunded and waived the January and February 2020 payroll tax payments (totalling $1.9m). All of the amounts set out below are accrued in the balance sheet at 30 June 2020.
|Deferred Contributions ($m)|
|Level of Government||Corporate Income Tax||Gaming taxes and duties||Employer payroll taxes||Other taxes and payments||Total tax payments deferred ($m)|
|Australian Federal Government||-||-||0.4||-||0.4|
|New South Wales Government||-||8.5||3.6||2.1||14.2|
|Other State Governments||-||-||-||-||-|
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) page 116 of The Star Entertainment Group’s 2020 Annual Report, extract below).
Although tax instalments were paid by The Star Entertainment Group in Australia in respect of FY2020 July 2019 to February 2020, these were refunded as part of the Federal Government’s COVID-19 financial relief. Ultimately, no further tax is payable in respect of FY2020 as it resulted in a tax loss.
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 FY2020 – 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.
Gaming taxes are calculated and paid by The Star Entertainment Group monthly to the State Governments where the properties are located. As part of the State Government’s COVID-19 financial relief, payments relating to operations in March 2020 were deferred by the State Governments until FY2021 following closure of the properties on 23 March 2020. Although, the Sydney property reopened on 1 June 2020, the gaming tax payable relating to limited operations in June 2020 was also deferred until FY2021. Queensland properties remained closed for the reminder of the FY2020 year.
Employer payroll taxes
With a workforce of almost 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.
As part of the State Government’s COVID-19 financial relief, both the New South Wales and Queensland State Governments deferred payroll tax instalments for the remainder of FY2020 to FY2021 (and FY2022 in Queensland). In addition, the Queensland Government also refunded and waived the January and February 2020 payroll tax instalments (totalling $1.9m).
The Federal Government extended the final payment deadline of 2020 fringe benefits tax to FY2021.
The Star Entertainment Group pays other taxes such as property taxes and car parking levies. Land taxes and levies deferred by the New South Wales State Government are payable in FY2021.
Taxes paid in FY2020 – Collections
|Level of Government||Employee payroll taxes||GST|
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.
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. The Federal Government deferred the remittance of $3.1m until September 2020.
Wage subsidy received in FY2020
The JobKeeper scheme is a Federal Government wage subsidy for businesses significantly affected by COVID-19. Under the scheme impacting FY2020, eligible employers were required to pay eligible employees a minimum of $1,500 per fortnight for the period 30 March 2020 to 27 September 2020. The ATO then paid the wage subsidy to the employer one month in arrears. The wage subsidy is taxable at the corporate tax rate of 30%.
The Star Entertainment Group was eligible for the JobKeeper subsidy as it satisfied the required decline in turnover test (i.e. greater than 50% reduction in GST turnover when compared to the prior year).
Due to government directed closures of The Star Entertainment Group’s properties, more than 95% of the almost 9,000 staff had to be temporarily stood down. Following the staged restricted reopening of the properties (1 June 2020 in Sydney and 3 July 2020 in Queensland) approximately 30% of the workforce remained stood down by the end of FY2020.
At 30 June 2020, the total JobKeeper subsidy paid to employees for April to June 2020 was $64.8m and amount received from the Federal Government was $40.0m. The Federal Government paid the June subsidy to the Group in July 2021 (one month in arrears).
Foreign subsidiaries providing marketing services also received forms of wage subsidy assistance totalling $230k in FY2020 from the Hong Kong and Singapore Governments.
ATO Public Disclosure
In late 2021, 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 2020 (the ITR) in its Report of entity tax information.
|Total income ||$1,554,021,606|
|Income tax payable||$0|
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 loss for the year ended 30 June 2020 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 is eliminated, accordingly the adjustment for offshore income represents offshore finance income 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).
|Reconciliation of accounting revenue to profit/(loss)|
|Other income ||$1,838,916|
|Finance income ||$402,395|
|Assessable government payments||$64,778,250|
|Total income (per ITR)||$1,554,021,606|
|Less: Total expenses||($1,684,066,143)|
|Accounting loss ||($130,044,537)|
Reconciliation of profit to taxable income
A reconciliation of The Star Entertainment Group’s accounting loss to tax loss for the year ended 30 June 2020, 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:
|Other assessable income ||$3,187,833|
|Other non-deductible ||$95,431,211|
|Non-assessable income ||$22,995,826|
|Tax loss ||($22,726,174)|
|Tax on taxable income||$0|
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 2020 is -15.2% (being net tax paid during the year divided by accounting loss). 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 the first half of FY2020 a further $19.5m 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
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).
|Tax provision per statutory accounts||$0|
|Tax provision per ITR||$0|
2 As reported at Item 6(S) of the 2020 ITR
3 Refer to Note A2 page 84 of The Star Entertainment Group’s 2020 Annual Report
4 Refer to Note A3 page 84 of The Star Entertainment Group’s 2020 Annual Report
5 Refer to Note A5 page 86 of The Star Entertainment Group’s 2020 Annual Report
6 Refer to page 78 of The Star Entertainment Group’s 2020 Annual Report, adjusted for income and expenses relating to overseas entities.
7Sum of amounts reported at Item 7(J) and (B) of the 2020 ITR
8Sum of amounts reported at Item 7(Z), (W) and (X) of the 2020 ITR, reduced for accounting depreciation shown separately
9Sum of amounts reported at Item 7(V) and (Q) of the 2020 ITR
10As reported at Item 7(T) of the 2020 ITR