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Income Taxes | 12 Months Ended
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Sep. 30, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Effects of the Tax Cuts and Jobs Act On December 22, 2017, the President of the United States signed and enacted into law H.R. 1, the Tax Cuts and Jobs Act (“the Tax Reform”). Among the significant changes to the U.S. Internal Revenue Code, the Tax Reform lowered the U.S. federal corporate income tax rate from 35% to 21%, effective January 1, 2018. The Company computed its income tax expense for the years ended September 30, 2021, 2020, and 2019 using a U.S. statutory tax rate of 21%. The Tax Reform also established new tax laws that affected the year ended September 30, 2019, including, but not limited to, (1) elimination of the corporate alternative minimum tax, (2) a new provision designed to tax global intangible low-taxed income (“GILTI”), (3) limitations on the utilization of net operating losses incurred in tax years beginning after September 30, 2018 to 80% of taxable income per tax year, (4) the creation of the base erosion anti-abuse tax (“BEAT”), (5) a general elimination of U.S. federal income taxes on dividends from foreign subsidiaries, and (6) limitations on the deductibility of interest expense and certain executive compensation. The Company made the policy election to treat GILTI as a current period expense when incurred. Coronavirus Aid, Relief, and Economic Security Act On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), which provides economic relief in response to the coronavirus pandemic. The CARES Act, among other things, includes provisions to allow certain net operating losses to be carried-back up to five years, to increase interest deduction limitations, accelerates the refunds of alternative minimum tax credits, and makes technical corrections to tax depreciation methods for qualified leasehold improvement property. The Company evaluated and properly accounted for the provisions of the CARES Act and there was no material impact to the Company’s consolidated financial statements. Income tax expense/(benefit) for the years ended September 30, 2021, 2020, and 2019 was allocated as follows:
| Year Ended September 30,
(in millions) | 2021 |  | 2020 |  | 2019
Income tax expense attributable to income from operations | $ | 37.8 |  |  | $ | 37.1 |  |  | $ | 25.9 |
Taxes allocated to stockholders’ equity, related to pension liabilities | 0.5 |  |  | — |  |  | (0.2) |
Total income tax expense | $ | 38.3 |  |  | $ | 37.1 |  |  | $ | 25.7 |
The components of income tax expense/(benefit) attributable to income from operations were as follows:
| Year Ended September 30,
(in millions) | 2021 |  | 2020 |  | 2019
Current taxes: |  |  |  |  |
U.S. federal | $ | 6.7 |  |  | $ | (0.6) |  |  | $ | (1.9) |
U.S. state and local | (0.1) |  |  | 2.3 |  |  | (0.8) |
Australia | 1.8 |  |  | 0.5 |  |  | — |
Brazil | 8.0 |  |  | 6.5 |  |  | 5.5 |
Germany | 6.0 |  |  | 3.4 |  |  | 0.1 |
Singapore | 1.9 |  |  | 2.8 |  |  | — |
United Kingdom | 6.6 |  |  | 13.9 |  |  | 17.2 |
Other international | 3.7 |  |  | 4.2 |  |  | 2.1 |
Total current taxes | 34.6 |  |  | 33.0 |  |  | 22.2 |
Deferred taxes: |  |  |  |  |
U.S. federal | 1.4 |  |  | 4.9 |  |  | 1.6 |
U.S. state and local | 2.7 |  |  | 0.6 |  |  | 0.4 |
Australia | 0.3 |  |  | (0.1) |  |  | 0.1 |
Brazil | (1.3) |  |  | (1.3) |  |  | — |
Singapore | 0.4 |  |  | 0.8 |  |  | 2.5 |
United Kingdom | 0.1 |  |  | (0.3) |  |  | (0.5) |
Other international | (0.4) |  |  | (0.5) |  |  | (0.4) |
Total deferred taxes | 3.2 |  |  | 4.1 |  |  | 3.7 |
Income tax expense | $ | 37.8 |  |  | $ | 37.1 |  |  | $ | 25.9 |
U.S. and international components of income/(loss) from operations, before tax, was as follows:
| Year Ended September 30,
(in millions) | 2021 |  | 2020 |  | 2019
U.S. | $ | 37.3 |  |  | $ | 88.8 |  |  | $ | (2.6) |
Australia | 7.8 |  |  | 1.4 |  |  | 0.4 |
Brazil | 13.7 |  |  | 7.6 |  |  | 12.6 |
Germany | 17.2 |  |  | 10.4 |  |  | (0.3) |
Singapore | 16.0 |  |  | 20.5 |  |  | 22.6 |
United Kingdom | 41.4 |  |  | 58.5 |  |  | 71.5 |
Other international | 20.7 |  |  | 19.5 |  |  | 6.8 |
Income from operations, before tax | $ | 154.1 |  |  | $ | 206.7 |  |  | $ | 111.0 |
Items accounting for the difference between income taxes computed at the federal statutory rate and income tax expense were as follows:
| Year Ended September 30,
| 2021 |  | 2020 |  | 2019
Federal statutory rate effect of: | 21.0 | % |  | 21.0 | % |  | 21.0 | %
U.S. State and local income taxes | 1.8 | % |  | 1.2 | % |  | (0.9) | %
Foreign earnings and losses taxed at different rates | 1.0 | % |  | 0.9 | % |  | 0.2 | %
Change in valuation allowance | 1.9 | % |  | 1.0 | % |  | 0.9 | %
Income tax rate holiday | (0.5) | % |  | (0.8) | % |  | 0.5 | %
U.S. permanent items | (1.2) | % |  | 0.6 | % |  | (0.5) | %
Non-deductible compensation | 1.9 | % |  | 0.6 | % |  | 0.7 | %
Foreign permanent items | (0.2) | % |  | 1.1 | % |  | 0.2 | %
U.S. bargain purchase gain | (0.5) | % |  | (8.3) | % |  | (1.0) | %
GILTI | 0.6 | % |  | 0.7 | % |  | 2.2 | %
Income tax rate change | (1.2) | % |  | — | % |  | — | %
Effective rate | 24.6 | % |  | 18.0 | % |  | 23.3 | %
The components of deferred income tax assets and liabilities were as follows:
(in millions) | September 30, 2021 |  | September 30, 2020
Deferred tax assets: |  |  |
Share-based compensation | $ | 1.7 |  |  | $ | 3.1 |
Deferred compensation | 4.7 |  |  | 4.1 |
Net operating loss carryforwards | 17.7 |  |  | 16.2 |
Intangible assets | 6.5 |  |  | 9.9 |
Bad debt reserve | 7.3 |  |  | 4.4 |
Tax credit carryforwards | — |  |  | 0.2 |
Foreign tax credit carryforwards | 2.0 |  |  | 2.4 |
Other compensation | 7.0 |  |  | 5.8 |
Property and equipment | 6.3 |  |  | 7.3 |
Pension | 1.2 |  |  | — |
Other | 3.1 |  |  | 1.9 |
Total gross deferred tax assets | 57.5 |  |  | 55.3 |
Less valuation allowance | (15.0) |  |  | (12.4) |
Deferred tax assets | 42.5 |  |  | 42.9 |
Deferred income tax liabilities: |  |  |
Unrealized gain on securities | 2.8 |  |  | 2.4 |
Prepaid expenses | 4.2 |  |  | 3.4 |
Pension liability | — |  |  | 0.2 |
Other deferred liabilities | 0.4 |  |  | — |
Deferred income tax liabilities | 7.4 |  |  | 6.0 |
Deferred income taxes, net | $ | 35.1 |  |  | $ | 36.9 |
Deferred income tax balances reflect the effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases and are stated at enacted tax rates expected to be in effect when taxes are actually paid or recovered. As of September 30, 2021 and 2020, the Company has net operating loss carryforwards for U.S. federal, state, local, and foreign income tax purposes of $6.2 million and $6.9 million, net of valuation allowances, respectively, which are available to offset future taxable income in these jurisdictions. The state and local net operating loss carryforwards of $3.6 million, net of valuation allowance, begin to expire after September 2022. The Company also has $0.6 million, net of valuation allowances, of federal net operating loss carryforwards, which consist of a portion that will expire in tax years ending 2031 through 2036. The remaining portion of the federal net operating loss carryforwards do not expire, but cannot be utilized until after 2037 and are limited by Internal Revenue Code (“IRC”) Section 382. As of September 30, 2021, the Company has $2.0 million, net of valuation allowance, of foreign net operating loss carryforwards primarily in the United Kingdom, which have an unlimited carryforward period. As a result of the CARES Act, the AMT credit carryforward was 50% refundable during the year ending September 30, 2019 and the remaining 50% was refundable in the year ended September 30, 2020, to the extent it was not used to offset regular income tax liability. The C ompany has no remaining foreign tax credit carryforwards, net of valuation allowance, as of September 30, 2021. The valuation allowance for deferred tax assets as of September 30, 2021 was $15.0 million. The net change in the total valuation allowance for the year ended September 30, 2021 was an increase of $2.6 million. Of this amount, $0.8 million was related to foreign tax credits acquired through the merger with Gain, which are limited by provision of IRC Section 383 and expire in 2023. The Company determined that it shall not have sufficient foreign source income to utilize any remaining foreign tax credits. The remaining increase is related to foreign and state net operating loss carryforwards. The valuation allowances as of September 30, 2021 and 2020 were primarily related to U.S. state and local and foreign net operating loss carryforwards that, in the judgment of management, are not more likely than not to be realized. T he Company does not intend to distribute earnings of its foreign subsidiaries in a taxable manner, and therefore intends to limit distributions to earnings previously taxed in the U.S., or earnings that would qualify for the 100 percent dividends received deduction, and earnings that would not result in any significant foreign taxes. The Company repatriated $300.6 million and $30.0 million during the years ended September 30, 2021 and 2020, respectively, of earnings previously taxed in the U.S. resulting in no significant incremental taxes. Therefore, the Company has not recognized a deferred tax liability on its investment in foreign subsidiaries. The Company had a de minimis balance of unrecognized tax benefits as of September 30, 2021, 2020, and 2019 that, if recognized, would affect the effective tax rate. Accrued interest and penalties are included in the related tax liability line in the Consolidated Balance Sheets. The Company had no accrued interest and penalties included in the Consolidated Balance Sheets as of September 30, 2021 and 2020. The Company recognizes accrued interest and penalties related to income taxes as a component of income tax expense. The Company had a de minimis amount of interest, net of federal benefit, and penalties recognized as a component of income tax expense during the years ended September 30, 2021, 2020, and 2019. The Company and its subsidiaries file income tax returns with the U.S. federal jurisdiction and various U.S. state and local and foreign jurisdictions. The Company has open tax years ranging from September 30, 2014 through September 30, 2021 with U.S. federal and state and local taxing authorities. In the U.K., the Company has open tax years ending September 30, 2019 to September 30, 2021. In Brazil, the Company has open tax years ranging from December 31, 2016 through December 31, 2020. In Argentina, the Company has open tax years ranging from September 30, 2014 to September 30, 2021. In Singapore, the Company has open tax years ranging from September 30, 2016 to September 30, 2021.

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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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