ASX LIMITED — Environmental & Social Information 2021

Aug 18, 2021

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19 August 2021

Australian Securities and Investments Commission Mr Nathan Bourne Senior Executive Leader, Market Infrastructure Level 5, 100 Market Street SYDNEY NSW 2000

ASX Market Announcements Office ASX Limited 20 Bridge Street SYDNEY NSW 2000

ASX LIMITED – 2021 TAX TRANSPARENCY REPORT

Attached is a copy of the 2021 Tax Transparency Report.

Release of market announcement authorised by:

Daniel Csillag

Company Secretary

Further enquiries:

Media

David Park

Senior Adviser, Media and Communications

• T +61 2 9227 0010

• M +61 429 595 788

Investors

Josie Ashton

General Manager, Investor Relations and Sustainability

• T +61 2 9227 0646

• M +61 416 205 234

• E david.park@asx.com.au E josie.ashton@asx.com.au

20 Bridge Street Sydney NSW 2000

PO Box H224 Customer service 13 12 79 Australia Square NSW 1215 asx.com.au

ASX Limited ABN 98 008 624 691

ASX Limited 2021 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 for 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 of 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 office 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’s engagement with the ATO and risk appetite

ASX’s adopts a low level of risk to 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.

Income tax expense disclosed in the Annual Report

ASX’s income tax expense reconciliation is disclosed in Note A5 of the ASX Group’s 2021 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. From FY18 to FY21, ASX’s ETR was higher due to impairment charges and non-deductible expenses. The ETR in FY17 was slightly less than the 30% corporate income tax rate due to receiving franked dividends from IRESS (a company listed on ASX in which ASX held an equity investment, this investment was sold in February 2019).

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.

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

• Identify, control and report tax risks

• ASX will adopt 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.

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ASX Limited 2021 Tax Transparency Report

Reconciliation of accounting profit to income tax expense

Reconciliation of accounting proft to income	tax expense
	FY 17	FY 18	FY 19	FY 20	FY 21
	$m	$m	$m	$m	$m
Netproft reported in fnancial statements	434.1	445.1	492.0	498.6	480.9
Income tax expense	182.3	197.0	213.1	222.2	207.0
Proft before income tax expense(A)	616.4	642.1	705.1	720.8	687.9
Income tax expense calculated at 30%	184.9	192.6	211.5	216.2	206.4
Increase in income tax expense due to:
Non-deductible items	0.2	1.3	3.1	2.6	2.2
Equityaccounted investments impairment	-	6.1	-	4.6	-
Decrease in income tax expense due to:
Net frankingcredit offset	(2.4)	(2.5)	(0.9)	-	-
Non assessable income	(0.1)	-	-	-	(0.1)
R&D tax offset	(0.2)	(0.4)	(0.5)	(1.0)	(1.5)
Adjustments ofpriorperiods	(0.1)	(0.1)	(0.1)	(0.2)	-
Income tax expense onproft(B)	182.3	197.0	213.1	222.2	207.0
Effective tax rate(ETR)(B)/(A)	29.6%	30.7%	30.2%	30.8%	30.1%

Reconciliation of income tax expense to income tax payable

	FY 17	FY 18	FY 19	FY20	FY21
	$m	$m	$m	$m	$m
Income tax expense onproft	182.3	197.0	213.1	222.2	-
Adjustments in the currentyear relatingtoprioryear tax	0.1	0.1	0.1	0.2	-
Permanent and timingdifferences	(0.2)	1.9	2.8	3.0	-
R&D tax offset	(1.0)	(1.6)	(2.3)	(3.7)	-
Tax on sale of IRESS	-	-	68.9	-	-
Income taxpayable	181.2	197.4	282.6	221.7	^1

^1 FY21 return not due at the time of this report.

ATO published tax information

Annually the ATO releases tax information of an entity’s total income, taxable income and income tax payable. To date, ASX’s consolidated tax return information for income tax years 2014 to 2019 has been published.

The following table details ASX’s published tax information for the income tax years 2017 to 2019. The ATO is yet to publish income tax years 2020 and 2021.

years 2020 and 2021.
	FY 17	FY 18	FY 19	FY 20	FY 21
	$m	$m	$m	$m		$m
Total income	931.5	1,012.9	1,089.4	1,095.3		-
Taxable income	620.0	676.8	955.6	754.5		-
Income taxpayable	181.2	**197.4 **	282.6	221.7^	2	^ 2
^2FY20 expected to be published by ATO and FY21 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 (FY17 to FY19) and R&D tax offsets.

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ASX Limited 2021 Tax Transparency Report

Tax contribution summary

The following chart provides a summary of ASX’s contribution, including amounts remitted on behalf of employees and collection of GST to the Australian tax system for the financial years ended 30 June 2020 and 30 June 2021.

Total tax contribution 2020 $357.0m

Total tax contribution 2021 $340.4m

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2.2% 0.2%
12.2%
23.1%
62.3%
Corporate income tax − $222.2m
Net GST remitted − $82.4m
Employee PAYG remitted − $43.7m
Employer payroll tax − $8.0m
Fringe benefits tax − $0.7m
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2.2% 0.2%
13.3%
23.5%
60.8%
Corporate income tax − $207.0m
Net GST remitted − $80.1m
Employee PAYG remitted − $45.2m
Employer payroll tax − $7.6m
Fringe benefits tax − $0.5m
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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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