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Income Taxes (Notes) | 12 Months Ended
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Sep. 30, 2021
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The more significant components of the Company’s income tax provision from continuing operations are as follows (in millions):
| Year Ended September 30,
| 2021 |  | 2020 |  | 2019
Tax expense at Ireland statutory rate | $ | 327 |  |  | $ | 113 |  |  | $ | 132 |
U.S. state income tax, net of federal benefit | 34 |  |  | 8 |  |  | 15 |
Income subject to the U.S. federal tax rate | 3 |  |  | (92) |  |  | (110) |
Income subject to rates different than the statutory rate | 30 |  |  | 99 |  |  | 38 |
Reserve and valuation allowance adjustments | 66 |  |  | (70) |  |  | (284) |
Intercompany intellectual property transfer | 417 |  |  | — |  |  | — |
Restructuring and impairment costs | (9) |  |  | 50 |  |  | (24) |
Income tax provision (benefit) | $ | 868 |  |  | $ | 108 |  |  | $ | (233) |
The statutory tax rate in Ireland of 12.5% is being used as a comparison since the Company is domiciled in Ireland. For fiscal 2021, the effective tax rate for continuing operations was 33% and was higher than the statutory tax rate primarily due to the tax impacts of an intercompany transfer of certain of the Company’s intellectual property rights, valuation allowance adjustments, the income tax effects of mark-to-market adjustments and tax rate differentials, partially offset by the benefits of continuing global tax planning initiatives. For fiscal 2020, the effective tax rate for continuing operations was 12% and was lower than the statutory tax rate primarily due to tax audit reserve adjustments, the income tax effects of mark-to-market adjustments, valuation allowance adjustments and the benefits of continuing global tax planning initiatives, partially offset by a discrete tax charge related to the remeasurement of deferred tax assets and liabilities as a result of Swiss tax reform, the tax impact of an impairment charge and tax rate differentials. For fiscal 2019, the effective rate for continuing operations was below the statutory rate primarily due to tax audit reserve adjustments, the income tax effects of mark-to-market adjustments, a tax indemnification reserve release, the tax benefits of an asset held for sale impairment charge and continuing global tax planning initiatives, partially offset by valuation allowance adjustments as a result of tax law changes, a discrete tax charge related to newly enacted regulations related to U.S. Tax Reform and tax rate differentials. Valuation Allowances The Company reviews the realizability of its deferred tax asset valuation allowances on a quarterly basis, or whenever events or changes in circumstances indicate that a review is required. In determining the requirement for a valuation allowance, the historical and projected financial results of the legal entity or consolidated group recording the net deferred tax asset are considered, along with any other positive or negative evidence. Since future financial results may differ from previous estimates, periodic adjustments to the Company’s valuation allowances may be necessary. In the fourth quarter of fiscal 2021, as a result of an intercompany transfer of certain of the Company’s intellectual property rights, the Company determined that it is more likely than not that certain deferred tax assets of Switzerland would be realized, and it was more likely than not that certain deferred tax assets of Canada would not be realized. The valuation allowance adjustments resulted in a $39 million net benefit to income tax expense in the three month period ended September 30, 2021. In the second quarter of fiscal 2021, due to changes in forecasted taxable income, the Company recorded a discrete tax charge of $105 million related to valuation allowances on certain Mexico deferred tax assets now considered unrealizable. In the fourth quarter of fiscal 2020, the Company performed an analysis related to the realizability of its worldwide deferred tax assets. As a result, and after considering feasible tax planning initiatives and other positive and negative evidence, the Company determined that it was more likely than not that certain deferred tax assets primarily within the U.S. would not be realized, and it is more likely than not that certain deferred tax assets of Canada would be realized. The valuation allowance adjustments resulted in a $26 million net benefit to income tax expense in the three month period ended September 30, 2020. In the fourth quarter of fiscal 2019, the Company performed an analysis related to the realizability of its worldwide deferred tax assets. As a result, and after considering feasible tax planning initiatives and other positive and negative evidence, the Company determined that it was more likely than not that certain deferred tax assets primarily within the U.S., Belgium, Japan and the United Kingdom would not be realized, and it is more likely than not that certain deferred tax assets of the U.S. and France will be realized. The valuation allowance adjustments resulted in an immaterial net impact to income tax expense for the three-month period ended September 30, 2019. In the first quarter of fiscal 2019, as a result of changes to U.S. tax law, the Company recorded a discrete tax charge of $76 million related to valuation allowances on certain U.S. deferred tax assets. Uncertain Tax Positions The Company is subject to income taxes in the U.S. and numerous non-U.S. jurisdictions. Judgment is required in determining its worldwide provision for income taxes and recording the related assets and liabilities. In the ordinary course of the Company’s business, there are many transactions and calculations where the ultimate tax determination is uncertain. The Company is regularly under audit by tax authorities. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in millions):
| Year Ended September 30,
| 2021 |  | 2020 |  | 2019
Beginning balance, October 1 | $ | 2,528 |  |  | $ | 2,451 |  |  | $ | 2,358 |
Additions for tax positions related to the current year | 240 |  |  | 128 |  |  | 433 |
Additions for tax positions of prior years | 33 |  |  | 129 |  |  | 347 |
Reductions for tax positions of prior years | (6) |  |  | (27) |  |  | (88) |
Settlements with taxing authorities | (24) |  |  | (54) |  |  | — |
Statute closings and audit resolutions | (45) |  |  | (99) |  |  | (599) |
Ending balance, September 30 | $ | 2,726 |  |  | $ | 2,528 |  |  | $ | 2,451 |
The amount of gross tax effected unrecognized tax benefits that, if recognized, would impact the effective tax rate was $2,268 million, $2,132 million, and $2,121 million as of September 30, 2021, 2020 and 2019, respectively. Total net accrued interest was approximately $252 million, $205 million, and $181 million (net of tax benefit) at September 30, 2021, 2020 and 2019, respectively. During fiscal 2020, tax audit resolutions resulted in a $44 million net benefit to income tax expense. During fiscal 2019, the Company settled tax examinations impacting fiscal years 2015 to 2016 and adjusted various tax audit reserves which resulted in a $586 million net benefit to income tax expense in the fourth quarter. In the third quarter of fiscal 2019, the Company recorded a discrete charge related to newly enacted regulations related to U.S. Tax Reform and a discrete charge related to non-U.S. tax examinations which impacted the Company’s reserves for uncertain tax positions resulting in a $226 million net charge to income tax expense. In the U.S., fiscal years 2017 through 2018 are currently under exam by the Internal Revenue Service (“IRS”) for certain legal entities. Additionally, the Company is currently under exam in the following major non-U.S. jurisdictions for continuing operations:
Tax Jurisdiction |  | Tax Years Covered
Belgium |  | 2015 - 2020
China |  | 2017 - 2019
Germany |  | 2007 - 2018
Luxembourg |  | 2017 - 2018
Mexico |  | 2015 - 2020
United Kingdom |  | 2014 - 2015, 2017 - 2018
It is reasonably possible that certain tax examinations and/or tax litigation will conclude within the next twelve months, which could have a material impact on tax expense. Based upon the circumstances surrounding these examinations, the impact is not currently quantifiable. Other Tax Matters In the fourth quarter of fiscal 2021, the Company completed an intercompany transfer of certain of the Company’s intellectual property rights which resulted in a net tax charge of $417 million. During fiscal 2021, the Company incurred charges for restructuring and impairment costs for continuing operations of $242 million. Refer to Note 17, "Significant Restructuring and Impairment Costs," and Note 18, "Impairment of Long-Lived Assets," of the notes to consolidated financial statements for additional information. These costs generated tax benefits of $39 million, which reflects the Company’s current tax position in these jurisdictions. During fiscal 2021, 2020 and 2019, the Company recorded mark-to-market gains (losses) of $402 million, $(274) million and $(618) million, respectively. These gains (losses) generated tax expense (benefit) of $93 million, $(65) million and $(130) million, respectively, which reflects the Company’s current tax position in these jurisdictions. During fiscal 2020, the Company incurred charges for restructuring and impairment costs for continuing operations of $783 million. Refer to Note 8, "Goodwill and Other Intangible Assets," Note 17, "Significant Restructuring and Impairment Costs," and Note 18, "Impairment of Long-Lived Assets," of the notes to consolidated financial statements for additional information. These costs generated tax benefits of $48 million, which reflects the Company’s current tax position in these jurisdictions. During fiscal 2020 and 2019, the Company recorded transaction and integration costs for continuing operations of $135 million and $317 million, respectively. These costs generated tax benefits of $18 million and $35 million, respectively, which reflects the Company’s current tax position in these jurisdictions. During fiscal 2019, the Company recorded a $235 million impairment charge related to assets held for sale. Refer to Note 18, "Impairment of Long-Lived Assets," of the notes to consolidated financial statements for further information regarding the impairment charge. The impairment charge generated a $53 million tax benefit. Also during fiscal 2019, the Company released a $226 million tax indemnification reserve, which was recorded within selling, general and administrative expenses in the consolidated statements of income. The reserve release generated no income tax expense. Impacts of Tax Legislation and Change in Statutory Tax Rates On March 27, 2020, in response to the COVID-19 pandemic, the “Coronavirus Aid, Relief and Economic Security Act” (“CARES”) was signed into law by the President of the United States. The CARES Act includes, among other things, U.S. corporate income tax provisions related to net operating loss carryback periods, alternative minimum tax credits, modifications to interest deduction limitations and technical corrections on tax depreciation methods for qualified improvement property. A majority of non-U.S. countries have also introduced various COVID-19 related corporate income tax relief provisions. The Company does not expect either the U.S. or non-U.S. corporate income tax provisions to have a material effect on its financial statements. In the first quarter of fiscal 2020, the Company recorded a noncash discrete tax charge of $30 million due to the remeasurement of deferred tax assets and liabilities related to Switzerland and the canton of Schaffhausen. On September 28, 2018, the Swiss Parliament approved the Federal Act on Tax Reform and AHV Financing (“TRAF”), which was subsequently approved by the Swiss electorate on May 19, 2019. During the fourth quarter of fiscal 2019, the Swiss Federal Council enacted TRAF which became effective for the Company on January 1, 2020. The impacts of the federal enactment did not have a material impact to the Company’s financial statements. TRAF also provides for parameters which enable the Swiss cantons to adjust tax rates and establish new regulations for companies. As of September 30, 2019, the canton of Schaffhausen had not concluded its public referendum; however, the enactment did occur during the first quarter of fiscal 2020. During the fiscal years ended 2021, 2020 and 2019, other tax legislation was adopted in various jurisdictions. These law changes did not have a material impact on the Company's consolidated financial statements. Continuing Operations Selected income tax data related to continuing operations were as follows (in millions):
| Year Ended September 30,
| 2021 |  | 2020 |  | 2019
Components of income (loss) from continuing operations before income taxes: |  |  |  |  |
U.S. | $ | 543 |  |  | $ | (385) |  |  | $ | (259) |
Non-U.S. | 2,071 |  |  | 1,288 |  |  | 1,315 |
Income from continuing operations before income taxes | $ | 2,614 |  |  | $ | 903 |  |  | $ | 1,056 |
Components of the provision (benefit) for income taxes: |  |  |  |  |
Current |  |  |  |  |
U.S. federal | $ | 459 |  |  | $ | 309 |  |  | $ | (1,025) |
U.S. state | 108 |  |  | 72 |  |  | (33) |
Non-U.S. | 265 |  |  | 264 |  |  | 213 |
| 832 |  |  | 645 |  |  | (845) |
Deferred |  |  |  |  |
U.S. federal | (7) |  |  | (382) |  |  | 412 |
U.S. state | 46 |  |  | (43) |  |  | 84 |
Non-U.S. | (3) |  |  | (112) |  |  | 116 |
| 36 |  |  | (537) |  |  | 612 |
Income tax provision (benefit) | $ | 868 |  |  | $ | 108 |  |  | $ | (233) |
Income taxes paid (refunded) | $ | 504 |  |  | $ | (386) |  |  | $ | 377 |
At September 30, 2021 and 2020, the Company recorded within the consolidated statements of financial position in other current assets approximately $120 million and $252 million, respectively, of income tax assets. At September 30, 2021 and 2020, the Company recorded within the consolidated statements of financial position in other current liabilities approximately $201 million and $243 million, respectively, of accrued income tax liabilities. The Company has not provided U.S. or non-U.S. income taxes on approximately $22.8 billion of outside basis differences of consolidated subsidiaries of Johnson Controls International plc. The Company is indefinitely reinvested in these basis differences. The reduction of the outside basis differences via the sale or liquidation of these subsidiaries and/or distributions could create taxable income. The Company's intent is to reduce the outside basis differences only when it would be tax efficient. Given the numerous ways in which the basis differences may be reduced, it is not practicable to estimate the amount of unrecognized withholding taxes and deferred tax liability on the outside basis differences. Deferred taxes were classified in the consolidated statements of financial position as follows (in millions):
| September 30,
| 2021 |  | 2020
Other noncurrent assets | $ | 755 |  |  | $ | 862 |
Other noncurrent liabilities | (443) |  |  | (385) |
Net deferred tax asset | $ | 312 |  |  | $ | 477 |
Temporary differences and carryforwards which gave rise to deferred tax assets and liabilities included (in millions):
| September 30,
| 2021 |  | 2020
Deferred tax assets |  |  |
Accrued expenses and reserves | $ | 407 |  |  | $ | 474 |
Employee and retiree benefits | 148 |  |  | 286 |
Property, plant and equipment | 369 |  |  | 182 |
Net operating loss and other credit carryforwards | 6,293 |  |  | 6,306 |
Research and development | 42 |  |  | 112 |
Operating lease liabilities | 334 |  |  | 304 |
Other, net | 28 |  |  | 99 |
| 7,621 |  |  | 7,763 |
Valuation allowances | (5,853) |  |  | (5,518) |
| 1,768 |  |  | 2,245 |
Deferred tax liabilities |  |  |
Subsidiaries, joint ventures and partnerships | 346 |  |  | 730 |
Intangible assets | 776 |  |  | 734 |
Operating lease right-of-use assets | 334 |  |  | 304 |
| 1,456 |  |  | 1,768 |
Net deferred tax asset | $ | 312 |  |  | $ | 477 |
At September 30, 2021, the Company had available net operating loss carryforwards of approximately $23.7 billion, of which $13.2 billion will expire at various dates between 2022 and 2041, and the remainder has an indefinite carryforward period. The Company had available U.S. foreign tax credit carryforwards at September 30, 2021 of $35 million which will expire in 2030. The valuation allowance, generally, is for loss and credit carryforwards for which realization is uncertain because it is unlikely that the losses and/or credits will be realized given the lack of sustained profitability and/or limited carryforward periods in certain countries.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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