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By Peter Hill
Publicly traded Australian multinationals with business in the U.S. have begun issuing formal statements to the Australian Stock Exchange on how the passage of tax reform in the U.S. impacts their U.S. tax positions.
The initial corporate statements—from Navitas Ltd., WorleyParsons Ltd and Brambles—for the most part take into account the immediate effect on the book value of tax assets after the U.S. reduced the corporate tax rate to 21 percent from 35 percent in the 2017 tax act (Pub. L. No. 115-97)
First to release statements to the Australian Stock Exchange (ASX) Dec. 27 were WorleyParsons, a provider of expertise in engineering, procurement and construction, and global education provider Navitas.
In its statement, Navitas said that in accordance with Australian accounting standards, it has re-measured the carrying value of its U.S. tax assets at the new corporate tax rate of 21 percent and reduced their carrying value from A$17.4 million ($13.7 million) to A$9.9 million.
“This change in value will result in a one-off charge to income tax expense of A$7.5 million that will be recorded in the 2018 interim financial statements of the Navitas Group,” the company said.
WorleyParsons said in its statement that while it is still considering the impact of the U.S. tax changes on its financial position as of Dec. 31, 2017 and on its effective tax rate going forward. Its current estimate is there will be a one-off charge to income tax expense of between A$45 million and A$60 million.
“This charge relates to a reduction in the Group’s US deferred tax assets due both to the decrease in the US corporate tax rate from 35% to 21% and to the potential loss in future years of currently available deductions,” the statement said. It also said that the charge would be excluded from the group’s underlying earnings.
Global supply-chain logistics company Brambles, notified the ASX Jan. 2 that it is also considering the impact of the law on its financial position as of Dec. 31, 2017and on its effective tax rate going forward.
But, Brambles’ said its current estimate is that there will be a one-off non-cash benefit to the group’s income tax expense of between $125 million and $155 million as of Dec. 31, 2017. As with Navitas and WorleyParsons, this benefit relates to a reduction in the group’s U.S. deferred tax liability due to the decrease in the corporate tax rate.
The company also stated that there are also a number of measures contained in the U.S tax changes “which could negatively impact” it, but that “subject to further review and analysis, Brambles’ preliminary assessment of the total tax reform package is that any change to the group’s effective tax rate is unlikely to be material.”
More information is expected from Brambles and WorleyParsons when they release their half-yearly results in February.
To contact the reporter on for this story: Peter Hill in Sydney at email@example.com
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The Navitas statement is available at https://e6c67dfea7107c66cf4b-5fe525cefecba56744297355853ea71e.ssl.cf6.rackcdn.com/1756269.pdf
The WorleyParsons statement is available at http://www.worleyparsons.com/InvestorRelations/ASX/Documents/2017/US%20tax%20law%2022%20Dec_FINAL.pdf
The Brambles statement is available at http://news.iguana2.com/brambles/ASX/BXB/1058220
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