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Income Taxes (Notes) | 9 Months Ended
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Mar. 31, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Tax Cuts and Jobs Act The Tax Cuts and Jobs Act (the "Act") was enacted on December 22, 2017. The Act makes broad and complex changes to the U.S. tax code, which have affected our current results and will affect our future results. The following are significant changes in the tax code that became effective for the Company beginning July 1, 2018:
• | eliminating the deduction for domestic production activity;
• | limiting the annual deduction for business interest;
• | taxing global intangible low-tax income;
• | allowing a deduction for domestically earned foreign intangible income; and
• | establishing a new base erosion and anti-abuse tax on payments between U.S. taxpayers and foreign related parties.
We completed the accounting for the Act as of December 31, 2018 and accounted for the tax effect of the Act as follows: Deferred Taxes Remeasurement We remeasured our domestic deferred tax assets and liabilities based on the rates at which we expect them to reverse in the future. At June 30, 2018, we completed the remeasurement of our domestic deferred tax assets and liabilities which resulted in an income tax benefit of $0.5 million included in fiscal 2018. One-time Transition Tax on Unrepatriated Earnings of Certain Foreign Subsidiaries The Act includes a one-time transition tax based on our total post-1986 foreign earnings and profits ("E&P") which we have previously deferred from U.S. income taxes. Based on our completed calculations surrounding this tax, we incurred no additional tax related to this provision since our foreign subsidiaries have overall negative E&P. Global Intangible Low-Tax Income (“GILTI”) The Act creates a new requirement that certain income earned by controlled foreign corporations must be included currently in the gross income of the U.S. shareholder. Under U.S. GAAP, we have made an accounting policy election to treat taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred instead of factoring such amounts into the measurement of our deferred taxes. For fiscal 2019, we project to have no U.S. taxable income inclusion related to GILTI. Valuation Allowances on Foreign Tax Credit Carryforwards We continue to assess our ability to utilize our foreign tax credits in light of the lower U.S. federal income tax rate. As of March 31, 2019, we had $1.5 million of foreign tax credit carryforwards, the majority of which relate to our branch operations in Canada. Future operations of our Canadian branches will impact our ability to utilize these credits. During this quarter we concluded that we are unlikely to realize the benefit of foreign tax credits generated by our Canadian operations, which expire in fiscal 2021. Therefore, we recorded a valuation allowance of $0.6 million. During our second fiscal quarter, we placed a valuation on $0.2 million of credits expiring in fiscal 2019 and fiscal 2020. The remaining $0.7 million of credits will expire in fiscal 2023 through fiscal 2025 if not utilized. Indefinite Reinvestment Assertion We do not provide for outside basis differences under the indefinite reinvestment assertion of ASC 740-30. Based on our analysis of the Act, we do not anticipate the need to provide for additional taxes for basis differences or withholding taxes on remitted foreign earnings in the immediate future. Effective Tax Rate Our effective tax rates for the three and nine months ended March 31, 2019 were 30.5% and 27.9%, respectively, compared to 14.2% and 38.1% for the same periods a year ago. We expected our fiscal 2019 effective tax rate to be approximately 27.0%. The effective tax rates for both periods in fiscal 2019 were negatively impacted by a valuation allowance of $0.6 million placed on foreign tax credits generated by our operations in Canada, which we believe will not be utilized prior to their expiration. The effective tax rate for the nine months ended March 31, 2019 was positively impacted by $0.3 million of excess tax benefits related to the vesting of stock-based compensation.

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