Voluntary Tax Transparency Report FY2021

FY2021 FY 2020.

Voluntary Tax Transparency Report.

In this document you’ll find detailed information about Frasers Property Australia and Frasers Property Industrial Australia’s tax affairs including our attitude towards managing tax, our tax governance processes and how much tax we paid during the year ended 30 September 2021.

Our Australian Platform Frasers Property Australia (FPA) and Frasers Property Industrial Australia (FPIA) are two of Australia’s leading property groups, active in the residential, retail, commercial, industrial, and build-to-rent sectors. FPA and FPIA are part of the Australian platform of Frasers Property Limited, a multi-national real estate company with assets of approximately S$40.3 billion as at 30 September 2021 and operations across 70 cities and 20 countries worldwide.

With nearly 100 years of experience, FPA has built over 145,000 homes for Australians in award-winning communities that are diverse, connected, and sustainable, including the internationally acclaimed Central Park Sydney and Ed.Square in NSW, Burwood Brickworks and Freshwater Place in VIC, and is a JV partner in the ~A$3 billion Central Place Sydney development in NSW. FPA’s operations cover the development of residential land, housing, and apartments; build-to-rent, commercial, retail and mixed-use properties. FPA have assets under management valued at A$1.9 billion in Australia as at 30 September 2021.

Frasers Property Industrial (FPI) owns and manages industrial and logistics properties in Australia and Europe, and its portfolio includes logistics facilities, warehouses and production facilities in strategic locations. FPIA is the Australian operations of FPI. FPI has approximately S$11.3 billion of assets under management as at 30 September 2021.

FPI and FPA provides property management services to the commercial, logistics and industrial properties owned by Frasers Logistics & Commercial Trust (FLCT). FLCT is a SGX-listed REIT with a S$6.7 billion portfolio comprising 101 logistics, industrial and commercial properties in five developed markets – Australia, Germany, Singapore, the United Kingdom and the Netherlands. FLCT is sponsored by the Frasers Property Limited Group and is managed by Frasers Logistics & Commercial Asset Management Pte. Ltd. FPA and FPIA have certified over 5.6 million square metres of Green Star space across our communities, and our commitment to reduce carbon has been approved by the global Science-Based Targets initiative. FPA and FPIA are also certified by the Australian Government’s Climate Active initiative.

Together, FPA and FPIA employ over 600 staff across Australia, with offices located in Sydney, Melbourne, Brisbane, Perth, and Hong Kong, and are recognised as an Employer of Choice for Gender Equality by the Australian Government’s Workplace Gender Equality Agency.

Australian Tax Groups Frasers Property Australia Pty Limited (FPAPL) and Frasers Property Industrial Australia Pty Limited (FPIAPL) are members of the FPAPL multiple entry consolidated group (FPAPL MEC Group). The FPAPL MEC Group and the Frasers (FPA) Pty Limited (FFPA) MEC Group (FFPA MEC Group) comprise the majority of the entities of the Frasers Property Limited Group’s Australian operations.

FPAPL, FPIAPL and FFPA prepare financial accounting information in accordance with standards issued by the Australian Accounting Standards Board (AASB) and are audited annually by an external independent auditor.

Tax risk appetite & tolerance The Risk Appetite & Tolerance Statement is a Statement endorsed by the FPA Board and FPI Board and sets out the level of risk (including tax risk) which the group is prepared to accept. Overall, the statement provides that the group has no tolerance for a material breach (that is, an infringement with a fine in excess of $50,000 or any criminal penalty).

The FPA Board and FPI Board is also committed to ensuring that any non-routine transactions or arrangements undertaken by the group are: • • •

Not tax driven and supported by genuine commercial activity.

Supported by a reasonably arguable position where it is unclear how tax legislation would apply.

Assessed in terms of the likelihood of contravening any tax anti-avoidance rules.

The FPA Board and FPI Board also have no tolerance for transfer pricing benefits to arise in respect of significant international related party dealings with any other Frasers Property group entities.

Tax governance The FPA Board and FPI Board Tax Governance Policy sets out our tax strategy as follows: • • • • •

o comply with all State and Federal tax obligations and pay or account for the correct amount of tax.

T To ensure that the FPA and FPIA tax positions adopted are consistent with what the FPA and FPI Directors authorised or believe is prudent.

To assess tax effective opportunities but ensure they are in line with the commercial objectives of the business and within the boundaries outlined in our Risk Appetite & Tolerance Statement.

To foster good relationships with State and Federal tax authorities through proactive management of FPA and FPIA tax affairs in ‘real time’ (where possible).

To collaborate with our related parties in relation to international reporting obligations.

Tax risk management The FPA Board and FPI Board is also committed to the identification, assessment, monitoring and management of risks across the organisation. The overall risk management process is governed by the Risk Management Policy and specific to tax, senior management developed the Tax Risk Management Procedure.

The FPA and FPI tax risk management and governance is depicted in the following diagram:

FPA Board and FPI Board

Risk Management Policy

FPA Board and FPI Board

Tax Governance Policy

CFO

Tax Governance Procedure

GM Tax

Tax Risk Management Procedure

Tax Roles & Responsibilities

Group Risk Appetite and Tolerance Statement

Other

Engagement with the Australian Taxation Office Consistent with our Tax Governance Policy, we seek to engage with the Australian Taxation Office (ATO) on a ‘real time’ basis by actively engaging and being transparent.

During FY 2021 the ATO commenced a Top 1000 GST Assurance Review of Frasers Property AHL Limited (FPAHL) for the period 1 July 2018 to 30 September 2019. The purpose of this review was to ensure FPAHL paid the right amount of GST and to identify areas of risk in respect of the period reviewed. The GST Assurance Review was completed in FY 2021 where FPAHL received a high overall level of assurance.

International related party dealings FPA and FPIA is part of the multi-national Frasers Property Limited group. Our related party dealings predominantly comprise of financing arrangements and transactions with our Hong Kong subsidiary used to market and sell our properties.

The international related party dealings between the FPAPL MEC Group and its overseas related parties are risk assessed in accordance with the internationally recognised ‘arm’s-length principle’ and in compliance with Australian transfer pricing laws supported by contemporaneous transfer pricing documentation.

Country-by-Country (CbC) reporting is part of a wide range of international measures aimed at combating tax avoidance through more comprehensive exchanges of tax information between countries.

The FPAPL MEC Group and FFPA MEC Group’s FY 2021 CbC reports were lodged with the ATO at the same time as the income tax return for that period.

Effective tax rate A high level summary of the FPAPL MEC Group and FFPA MEC Group’s FY 2021 tax results are presented below: FPAPL $m

FFPA $m

1,737.4

15.3

(1,026.8)

(14.4)

710.6

0.9

(719.4)

(1.5)

0.5

—

(595.1) (1.0) (128.5) 4.7 —

— — (1.6) 0.1 —

(8.8)

(0.6)

E. Tax Payable @ 30%

—

—

Effective Tax Rate – Note 1 below

—

—

A. Total Income B. Total Expenses C. Accounting Profit Add/Less: Adjustments required under Australian tax laws Permanent Differences Other

•

Temporary Differences • • • • •

Revaluations Depreciation Net Property Dealings Other Utilisation of carried forward tax losses

D. Taxable Income/(Loss)

Note 1: Effective Tax Rates (ETR) The ETR is calculated in respect of tax payable (E) which relates to corporate taxes divided by accounting profit (C).

In FY 2021 the FPAPL MEC Group had an accounting profit of $710.6 million (C) however generated a tax loss of $8.8 million (D).

The FPAPL MEC Group temporary differences are as a result of the differing tax treatment between the AASB and the Income Tax Assessment Act (ITAA). The difference between the accounting profit and tax loss is predominantly due to the capitalised inventory cost deductions, investment properties depreciation expense, and reversal of the fair value revaluation gains/(losses). These temporary differences resulted in an ETR of 0%.

In FY 2021, the FFPA MEC Group had an accounting profit of $0.9 million (C) however generated a tax loss of $0.6 million (D). The difference between the accounting profit and taxable income is predominantly due to the inventory timing differences, which resulted in an ETR of 0%.

Total taxes paid During FY 2021 the FPAPL MEC Group and FFPA MEC Group paid $147.5 million in various taxes and levies in Australia at the State and Federal level.

A summary of the taxes paid is summarised below: Taxes Paid

$m

Corporate Taxes (refer to Note 1 below)

—

Employment Taxes (refer to Note 2 below)

52.7

State Taxes (refer to Note 3 below)

43.4

Net Goods & Services Tax (refer to Note 4 below)

43.7

Council Rates (refer to Note 5 below) Total Taxes Paid

7.7 147.5

ote 1: Corporate Taxes N Corporate taxes in Australia are paid by companies on ‘taxable profits’ at the rate of 30%. The term ‘taxable profits’ refers to the accounting profit (i.e. total income less expenses) adjusted in accordance with the ITAA 1936 and the ITAA 1997 to arrive at the ‘taxable income’ that is taxed at the corporate rate of 30% (i.e. ‘income tax’). This amount represents the Australian group’s payments made in respect of the financial year from 1 October 2020 to 30 September 2021. This figure also includes withholding tax paid (additional to the tax paid on company tax profits). ote 2: Employment Taxes N Employment taxes include Payroll Tax, Pay-As-You-Go withholding, superannuation guarantee and Fringe Benefits Tax. ote 3: State Taxes N State taxes include Land Tax, Stamp Duty and Car Park Levies payable in each Australian state. ote 4: Net Goods & Services Tax (GST) N The GST figure shown is the net GST amount paid. Net GST amount represents the GST collected on outputs (i.e. sales) less GST claimed on expenses.

Note 5: Council Rates Council Rates are local government charges payable in respect of each development held around Australia.

If you require further information, please contact Frasers Property: Email: tax@frasersproperty.com.au

Cover image: Five Farms, VIC Back image: Phoenix Transport, QLD