ASX : 6. ASX 2022 Tax Transparency Report

18 August 2022
Australian Securities and Investments Commission	ASX Market Announcements Office
Mr Nathan Bourne	ASX Limited
Senior Executive Leader, Market Infrastructure	20 Bridge Street
Level 5, 100 Market Street	SYDNEY NSW 2000
SYDNEY NSW 2000
ASX LIMITED - 2022 TAX TRANSPARENCY REPORT
Attached is a copy of the 2022 Tax Transparency Report.
Release of market announcement authorised by:
Daniel Moran
Group General Counsel and Company Secretary
Further enquiries:
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ASX Limited ABN 98 008 624 691	Australia Square NSW 1215	asx.com.au

ASX Limited 2022

Tax Transparency Report

ASX Group

ASX Limited (ASX) is Australia's leading exchange group and one of the 50 largest companies by market capitalisation listed in Australia. It was created as a national exchange in April 1987 after the amalgamation of Australia's six state-based stock exchanges. In July 2006, ASX merged with SFE Corporation, which operated the major derivatives exchange in Australia.

ASX is ranked among the world's top 10 exchange groups measured by market capitalisation. As a fully integrated exchange group, ASX offers a suite of services including listings, trading, clearing and settlement across multiple asset classes - equities, fixed income, commodities, and energy. ASX has an expansive customer base including retail, institutional and corporate customers directly and through Australian and international intermediaries.

Operations of ASX are licensed by the Australian Securities and Investments Commission (ASIC) and the Reserve Bank of Australia (RBA).

ASX'S APPROACH TO TAX RISK MANAGEMENT AND GOVERNANCE

ASX has a robust corporate governance and risk management framework that governs the operations of the business. Tax is an important subset of this framework, which strives to ensure high standards of corporate and social responsibility and incorporates comprehensive risk management processes and procedures. The Board and Management have the responsibility for ASX's tax risk and strategy, with the CFO providing regular updates to the Audit & Risk Committee on any tax issues and developments.

ASX carries out operations in Australia through one consolidated tax group. ASX is the head of the consolidated tax group and is responsible for the income tax liability of the Australian-based entities within the group. ASX operates a US-domiciled subsidiary and representative offices in New Zealand. These offices promote ASX services to offshore customers only and ASX provides these services from Australia. The US domiciled subsidiary's contribution to tax is immaterial.

ASX adopts a low risk tax strategy for its activities and tax compliance obligations. ASX's Tax Policy reinforces the following key principles:

• Identify, control and report tax risks.
• ASX adopts a conservative approach in its interpretation of applicable taxation legislation.
• Ensure that the taxation principles are applied consistently.
• Maintain open and transparent professional relationships with revenue authorities.

ASX'S ENGAGEMENT WITH THE ATO AND RISK APPETITE

ASX's adopts a low level of risk for all tax compliance and significant transaction activities. Early engagement with the ATO and tax advisers is undertaken by ASX in order to fully comply with tax obligations and operate in a low risk tax environment.

ASX is also meeting all compliance and payment obligations in each overseas jurisdiction, including the payment of local, state and federal taxes.

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INCOME TAX EXPENSE DISCLOSED IN THE ANNUAL REPORT

ASX's income tax expense reconciliation is disclosed in Note B5 of the ASX Group's 2022 Annual Financial Report. The income tax expense disclosed in the Annual Financial Report is calculated in accordance with Australian Accounting standards and represents the profit before income tax expense multiplied by the applicable corporate income tax rate of 30% adjusted for "non-temporary" differences. Non temporary differences represent differences between income and expense recognition criteria under accounting principles and income tax legislation, these can include non-deductible expenses and non-assessable adjustments.

ASX's Effective Tax Rate (ETR) is calculated as income tax expense divided by profit before income tax expense.

The following table provides ASX's ETR over the past five years, with ASX's ETR higher than 30% due non-deductible expenses.

The size of our US subsidiary's contribution to the overall financial results of the business is immaterial and therefore does not affect the overall effective tax rate disclosed in this report.

Reconciliation of accounting profit to income tax expense

	FY18	FY19	FY20	FY21	FY22
	$m	$m	$m	$m	$m
Net profit reported in financial statements	445.1	492.0	498.6	480.9	508.5
Income tax expense	197.0	213.1	222.2	207.0	221.8
Profit before income tax expense (A)	642.1	705.1	720.8	687.9	730.3
Income tax expense calculated at 30%	192.6	211.5	216.2	206.4	219.1
Increase in income tax expense due to:
Non-deductible items	1.2	1.6	1.1	0.3	0.3
Equity accounted investment losses	0.1	1.5	1.5	1.8	4.2
Equity accounted investments impairment	6.1	-	4.6	-	-
Decrease in income tax expense due to:
Net franking credit offset	(2.5)	(0.9)	-	-	-
R&D	(0.4)	(0.5)	(1.0)	(1.5)	(1.6)
Adjustments of prior periods	(0.1)	(0.1)	(0.2)	-	(0.2)
Income tax expense on profit (B)	197.0	213.1	222.2	207.0	221.8
Effective tax rate (ETR) (B)/(A)	30.7%	30.2%	30.8%	30.1%	30.4%
Reconciliation of income tax expense to income tax payable
	FY18	FY19	FY20	FY21	FY22
	$m	$m	$m	$m	$m
Income tax expense on profit	197.0	213.1	222.2	207.0	-
Adjustments in the current year relating to prior year tax	0.1	0.1	0.2	0.1	-
Timing differences	1.9	2.8	3.0	3.9	-
R&D tax offset	(1.6)	(2.3)	(3.7)	(7.3)	-
Tax on sale of IRESS	-	68.9	-	-	-
Income tax payable	197.4	282.6	221.7	203.7	^1

^1. FY22 not due at the time of this report.

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ATO PUBLISHED TAX INFORMATION

Annually the ATO releases tax information of an entities total income, taxable income and income tax payable. To date, ASX's consolidated tax return information for income tax years 2014 to 2020 has been published.

The following table details ASX's published tax information for the income tax years 2018 to 2020. The ATO is yet to publish income tax years 2021 and 2022.

	FY18	FY19	FY20	FY21	FY22
	$m	$m	$m	$m	$m
Total income	1,012.9	1,089.4	1,095.3	1,017.1	-
Taxable income	676.8	955.6	754.5	708.5	-
Income tax payable	197.4	282.6	221.7	203.7^2	^2

^2. FY21 expected to be published by ATO and FY22 not due at the time of this report.

Total income in the above table comprises total revenue and gross interest income. Taxable income is calculated on accounting concepts and adjusted for allowable tax temporary differences and non-temporary differences in accordance with Australian income tax legislation. Tax payable is then calculated at the corporate income tax rate of 30% of taxable income, less tax offsets. ASX's tax offsets include franking credits received from IRESS shares (FY18 to FY19) and R&D tax offsets.

TAX CONTRIBUTION SUMMARY

The following chart provides a summary of ASX's contribution to the Australian tax system for the financial years ended 30 June 2021 and 30 June 2022.

Total tax contribution 2022	Total tax contribution 2021
$365.8m	$340.4m
2.3% 0.1%	2.2% 0.2%
13.7%			13.3%
23.3%			23.5%
60.6%	60.8%

Corporate Income Tax	$221.8m		Corporate Income Tax	$207.0m
Net GST Remitted	$85.2m		Net GST Remitted	$80.1m
Employee PAYG Remitted	$50.0m		Employee PAYG Remitted	$45.2m
Employer Payroll Tax	$8.4m		Employer Payroll Tax	$7.6m
Fringe Benefits tax	$0.4m		Fringe Benefits tax	$0.5m

The above chart reflects taxes paid based on the reported financial statements.

Corporate income tax	Income tax expense based on ASX's profit before tax
GST payments	Net GST collected by ASX (gross receipts collected less GST paid on business inputs)
Employee PAYG remittances	Employee income tax remitted to the ATO on remuneration paid by ASX to its employees
Payroll tax	Tax paid on ASX's employment costs
Fringe Benefits Tax	Tax paid on benefits provided to staff

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