Income Tax
Our results for the three and six months ended March 31, 2018 benefited from the estimated effects of the Tax Cuts and Jobs Act (the Act), which was signed on December 22, 2017 and was effective from January 1, 2018.
Our results for the six months ended March 31, 2018 were affected by:
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A one-time "toll tax" on our undistributed and previously untaxed earnings in foreign locations, of approximately $9.5 million, recorded in the three months ended December 31, 2017;
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A one-time benefit from the reduction of our deferred tax liabilities of $11.7 million, of which $1.1 million was recorded in the three months ended March 31, 2018, to reflect the new U.S. federal tax rates; and
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A reduced provision for income taxes to reflect the new lower U.S. corporate tax rates of approximately $12.8 million for the six months ended March 31, 2018, split evenly between both quarters, compared to our tax provision under previous law.
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The calculations of deferred tax assets and liabilities and the toll tax are complicated by two factors:
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Our U.S. federal income tax return for fiscal year 2017, which ended on September 30, 2017, is required to be filed on or before July 15, 2018, and certain estimates of differences between recorded amounts for financial reporting purposes and for tax reporting purposes will continue to be refined for the next several months; and |
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The “toll tax” requires the gathering of detailed information previously not required to be filed with our U.S. federal tax returns; both the IRS and U.S. Treasury Department will be providing interpretations and guidance over the next several months to assist tax payers in calculating the toll tax. In addition, many U.S. states continue to issue their interpretations of the Act, which may change our estimates of our charge. |
Accordingly, the accounting for certain income tax effects of the Act is provisional. We believe that we have a reasonable basis for our estimates.
Our effective income tax rate for the three and six months ended March 31, 2018 was 24.1% and 24.5%, respectively, compared to our effective income tax rate for the three and six months ended March 31, 2017 of 33.6% and 35.1%, respectively. The net effect of our toll charge and reduction of deferred tax liabilities reduced the effective income tax rate by approximately 1.5% and 1.4% for the three and six months ended March 31, 2018, respectively.
During the six months ended March 31, 2018 and 2017, we made income tax payments of $28.5 million and $38.8 million, respectively.
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