In the simplest sense under IFRS 15, when excise taxes are effectively a tax on an entity’s production, the excise tax should be included in top-line revenue and flow through the income statement. Under IFRS 15, companies no longer have the same latitude as they did and will have to include certain excise taxes on the income statement, depending on a number of factors. Article contentĭiageo’s fiscal 2018-FY consolidated income statement This advertisement has not loaded yet, but your article continues below. In Diageo’s 2018 Annual Report, for example, the company paid more than £6.269 billion in excise taxes alone, making up more than 34 percent of its gross revenue. Understandably, this lack of uniformity created a slight issue for comparability across the alcoholic beverage industry, especially given the sheer size of the excise taxes incurred. chose to omit all excise taxes from its income statement. While companies such as alcoholic beverages giant Diageo chose to include certain excise taxes in top-line revenue and, subsequently, expense them on the income statement – other companies such as competitor Heineken N.V. Prior to the mandatory introduction of IFRS 15, companies had a degree of latitude when it came to how they presented excise taxes and whether to include them in their top-line revenues or just omit them entirely.
Article content Cannabis plants grow in a greenhouse at the Hexo Corp. However, HEXO’s decision is not a matter of bad faith, but rather a product of the accounting standards and the specific nature of Canada’s excise tax on cannabis, which requires the company to do so. It is understandable in this era of aggressive competition for both capital and customers why a company would want to augment its revenues. This leads to the question: Why has HEXO included the excise taxes owed in its top-line gross revenue? Why didn’t the company omit these taxes entirely as one would do with a tax like Canada’s Harmonized Sales Tax (HST), which is never included in a company’s revenue? If one were to do the math, HEXO’s net revenue of $5.66 million is just its gross revenue less than the excise taxes that were incurred. Of HEXO’s $6.67 million in gross revenue, $1.01 million, or just over 15 percent, is attributable to paying excise taxes. 31, 2018, the company’s financials included a considerable amount of adult-use sales as well as excise taxes that were incurred and payable to the government. Article content With HEXO’s quarter-end of Oct.
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