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Income Taxes | 6 Months Ended
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Mar. 31, 2018
Income Tax Disclosure [Abstract] |
Income Tax Reform | Note 5 — Income Tax Reform U.S. Tax Reform On December 22, 2017, the TCJA was enacted into law. Among the significant changes resulting from the law, the TCJA reduces the U.S. federal income tax rate from 35% to 21% effective January 1, 2018, creates a territorial tax system with a one-time mandatory “toll tax” on previously un-repatriated foreign earnings, and allows for immediate capital expensing of certain qualified property. It also applies restrictions on the deductibility of interest expense, eliminates bonus depreciation for regulated utilities and applies a broader application of compensation limitations. In accordance with GAAP as determined by ASC 740, “Income Taxes,” we are required to record the effects of tax law changes in the period enacted. As further discussed below, our results for the three and six months ended March 31, 2018, contain provisional estimates of the impact of the TCJA. These amounts are considered provisional because they use estimates for which tax returns have not yet been filed and because estimated amounts may be impacted by future regulatory and accounting guidance if and when issued. In accordance with SEC Staff Accounting Bulletin (“SAB”) No. 118, we will adjust these provisional amounts as further information becomes available and as we refine our calculations. As permitted by the guidance issued by the SEC, these adjustments may occur during a reasonable “measurement period” not to exceed twelve months from the date of enactment. As a result, during the three and six months ended March 31, 2018, we reduced our net deferred income tax liabilities by $5.0 and $388.8, respectively, due to the remeasuring of our existing federal deferred income tax assets and liabilities as of the date of the enactment in December 2017, and as a result of adjusting our original provisional amounts during the quarter ended March 31, 2018. Because part of the reduction to our net deferred income taxes relates to UGI Utilities’ regulated utility plant assets as further described below, most of UGI Utilities’ reduction in deferred income taxes is not being recognized immediately in income tax expense. Discrete deferred income tax adjustments recorded during each of the three month periods ended December 31, 2017 and March 31, 2018, and the six months ended March 31, 2018, which reduced (increased) income tax expense consisted primarily of the following items:
|  | Provisional amounts - Three months ended December 31, 2017 |  | Changes to provisional amounts - Three months ended March 31, 2018 |  | Provisional amounts - Six months ended March 31, 2018
Reduction in net deferred tax liabilities in the U.S. from the reduction of the U.S. tax rate |  | $ | 180.3 |  |  | $ | — |  |  | $ | 180.3 |
Establishment of valuation allowances related to deferred tax assets impacted by TCJA |  | (12.6 | ) |  | 5.0 |  |  | (7.6 | )
Toll-tax on un-repatriated earnings |  | (1.7 | ) |  | 0.3 |  |  | (1.4 | )
Total discrete deferred income tax adjustments |  | $ | 166.0 |  |  | $ | 5.3 |  |  | $ | 171.3 |
Impact on earnings per share: |  |  |  |  |  |
Basic earnings per share |  | $ | 0.96 |  |  | $ | 0.03 |  |  | $ | 0.99 |
Diluted earnings per share |  | $ | 0.94 |  |  | $ | 0.03 |  |  | $ | 0.97 |
In order for UGI Utilities’ regulated utility plant assets to continue to be eligible for accelerated tax depreciation, current law requires that excess deferred income taxes be amortized no more rapidly than over the remaining lives of the assets that gave rise to the excess deferred income taxes. At December 31, 2017, UGI Utilities has recorded a regulatory liability of $216.1 associated with excess deferred federal income taxes related to its regulated utility plant assets. This regulatory liability has been increased, and a federal deferred income tax asset has been recorded, in the amount of $87.8 to reflect the tax benefit generated by the amortization of the excess deferred federal income taxes. This regulatory liability is being amortized to income tax expense over the remaining lives of the assets that gave rise to the excess deferred income taxes. For further information on this regulatory liability, see Note 7. For the three and six months ended March 31, 2018, we included the estimated impacts of the TCJA in determining our estimated annual effective income tax rate. We are subject to a blended federal tax rate of 24.5% for Fiscal 2018 because our fiscal year contains the effective date of the rate change from 35% to 21%. As a result, the U.S. federal income tax rate included in our estimated annual effective tax rate is based on this 24.5% blended rate for Fiscal 2018. For the three and six months ended March 31, 2018, the effects of the tax law changes on current-period results (excluding the one-time impacts described above) decreased income tax expense, and increased net income attributable to UGI, by approximately $34.0 and $54.5, respectively. As a result of the TCJA tax law changes, in January 2018, the PUC opened a proceeding to consider whether existing rates charged by Pennsylvania utilities are no longer “just and reasonable,” as required by Pennsylvania law. On February 12, 2018, the PUC issued a Secretarial Letter requesting detailed information from large public utilities, including UGI Utilities, and inviting interested parties to submit comments on the impacts of the TCJA. On March 15, 2018, the PUC entered a temporary rates Order that converted commission-approved rates of most large Pennsylvania public utilities, including Gas Utility, into “temporary rates” for a period of six months, with a possible extension for an additional six months. It ordered each affected public utility to file a tariff supplement designating its existing rates and riders as temporary, effective March 15, 2018. In its comments on March 9, 2018, UGI Utilities expressed the view that, as a matter of law, reducing base rates by the tax impact of the TCJA would be unlawful if the result did not permit the utility to earn a reasonable rate of return and proposed to give approximately half of the benefits from the TCJA to customers through a reduction in rates and increased funding for low income and gas operations programs. The PUC is in the process of reviewing the data and comments submitted in response to the Secretarial Letter. Due to the complexity of the tax law changes and the numerous public utilities involved, the PUC has stated that it is unable to determine when it will complete its review and resolve the issues presented. Changes in French Corporate Income Tax Rates In December 2017, the French Parliament approved the Finance Bill for 2018 and the second amended Finance Bill for 2017 (collectively, the “December 2017 French Finance Bills”). One impact of the December 2017 French Finance Bills is an increase in the Fiscal 2018 corporate income tax rate in France to 39.4% from 34.4% previously. The December 2017 French Finance Bills also include measures to reduce the corporate income tax rate to 25.8% effective for fiscal years starting after January 1, 2022 (Fiscal 2023). As a result of the future corporate income tax rate reduction effective in Fiscal 2023, during the three months ended December 31, 2017, the Company reduced its net French deferred income tax liabilities and recognized an estimated deferred tax benefit of $17.3. During the three months ended March 31, 2018, this estimated deferred tax benefit was adjusted downward by $3.7 to $13.6 (equal to $0.08 per basic and diluted share) for the six months ended March 31, 2018. The estimated annual effective income tax rate used in determining income taxes for the six months ended March 31, 2018, reflects the impact of the single year Fiscal 2018 income tax rate increase as a result of the December 2017 French Finance Bills. The impact of the single year rate change increased income tax expense for the three and six months ended March 31, 2018, by approximately $1.1 and $5.0, respectively. In December 2016, the French Parliament approved the Finance Bill for 2017 and amended the Finance Bill for 2016 (collectively, the “December 2016 French Finance Bills”). The December 2016 French Finance Bills, among other things, will reduce UGI France’s corporate income tax rate from the then-current 34.4% to 28.9%, effective for fiscal years starting after January 1, 2020 (Fiscal 2021). As a result of this future income tax rate reduction, during the three months ended December 31, 2016, the Company reduced its net French deferred income tax liabilities and recognized an estimated deferred tax benefit of $27.4 (equal to $0.15 per basic and diluted share).

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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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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