IREN LtdIREN
IREN Ltd Income Taxes Disclosure
Note 22. Income taxes
For financial reporting purposes, income (loss) before income taxes includes the following components:
| (in USD thousands) | Years ended June 30, | ||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Australia | $ | 70,955 | $ | (31,133) | $ | (101,759) | |||||||||||
| Foreign | 22,546 | 5,666 | (67,679) | ||||||||||||||
| Total | $ | 93,501 | $ | (25,467) | $ | (169,437) | |||||||||||
The components of the provision (benefit) for income taxes consists of:
| (in USD thousands) | Years ended June 30, | ||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current | |||||||||||||||||
| Australian Federal | $ | — | $ | — | $ | (959) | |||||||||||
| Australian State | — | — | — | ||||||||||||||
| Foreign | 1,665 | 1,743 | 32 | ||||||||||||||
| Total current | 1,665 | 1,743 | (927) | ||||||||||||||
| Deferred | |||||||||||||||||
| Australian Federal | — | — | 1,816 | ||||||||||||||
| Australian State | — | — | — | ||||||||||||||
| Foreign | 4,895 | 1,710 | 1,501 | ||||||||||||||
| Total deferred | 4,895 | 1,710 | 3,317 | ||||||||||||||
| Total income tax provision (benefit) | $ | 6,560 | $ | 3,453 | $ | 2,390 | |||||||||||
A reconciliation of the Australian Corporate statutory income tax rates to the Group’s effective tax rate and summary of significant components of income tax expense is as follows:
| (in USD thousands, and in percentages) | Years ended June 30, | |||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||
| Tax (benefit)/provision computed at the Australian Corporate statutory rate | $ | 28,050 | 30.0 | % | $ | (7,640) | 30.0 | % | $ | (50,831) | 30.0 | % | ||||||||||||||
| State taxes, net of federal tax benefit | — | — | — | — | — | — | ||||||||||||||||||||
| Share based Compensation | 12,603 | 13.5 | 6,422 | (25.2) | 3,913 | (2.3) | ||||||||||||||||||||
| Increase/(Decrease) in non-deductible expenses | (3,196) | (3.4) | 1,664 | (6.5) | 1,186 | (0.7) | ||||||||||||||||||||
| Foreign currency differences related to accounting and tax functional currencies | 1,893 | 2.0 | — | — | — | — | ||||||||||||||||||||
| Foreign tax rate differential | (1,700) | (1.8) | (436) | 1.7 | 1,979 | (1.2) | ||||||||||||||||||||
| Non-recoverable foreign withholding tax | 1,225 | 1.3 | 308 | (1.2) | — | — | ||||||||||||||||||||
| Changes in valuation allowances | (37,791) | (40.4) | 2,615 | (10.3) | 28,224 | (16.7) | ||||||||||||||||||||
| Changes in unrecognized tax benefits | 1,453 | 1.6 | — | — | — | — | ||||||||||||||||||||
| Deconsolidation Adjustment for SPV's | — | — | — | — | 18,362 | (10.8) | ||||||||||||||||||||
| Other permanent differences | 3,918 | 4.2 | — | — | — | — | ||||||||||||||||||||
| Other | 103 | 0.1 | 519 | (2.0) | (443) | 0.3 | ||||||||||||||||||||
| Total tax expense/(benefit) and Effective tax rate | $ | 6,560 | 7.0 | % | $ | 3,453 | (13.6) | % | $ | 2,390 | (1.4) | % | ||||||||||||||
The effective income tax rate for the year ended June 30, 2025 was 7.0% compared to (13.6)% for 2024. The movement in effective income tax rate was primarily due to increased profit from operations and increased non-deductible Share Based Compensation costs in Australia and Canada.
The following table summarizes the components of deferred tax assets and deferred tax liabilities:
| June 30, 2025 | June 30, 2024 | ||||||||||
| Deferred tax assets | |||||||||||
| Tax losses | $ | 146,929 | $ | 41,467 | |||||||
| Unrealized foreign exchange losses | 475 | 736 | |||||||||
| Capital raising costs | 10,326 | 8,616 | |||||||||
| Loss Contingencies | 6,000 | — | |||||||||
| Unrealized Capital Losses | 29,302 | 29,909 | |||||||||
| Other | 3,846 | 3,879 | |||||||||
| Total deferred tax assets | 196,879 | 84,607 | |||||||||
| Valuation allowance | (25,281) | (58,582) | |||||||||
| Net deferred tax assets | 171,598 | 26,025 | |||||||||
| Deferred tax liabilities | |||||||||||
| Property, plant and equipment | (142,893) | (24,536) | |||||||||
| Unrealized foreign exchange gains | (5,511) | (2,784) | |||||||||
| Employee Benefits | — | (116) | |||||||||
| Convertible Notes | (3,704) | — | |||||||||
| Financial Assets | (21,068) | — | |||||||||
| Other | (6,394) | (1,714) | |||||||||
| Total deferred tax liabilities | (179,570) | (29,150) | |||||||||
| Total net deferred tax liability | $ | (7,971) | $ | (3,125) | |||||||
The amount included in valuation allowance as at June 30, 2025 includes an amount of $25,281,000 for Deferred Tax Assets evaluated as not meeting the 'more-likely-than-not' realizability standard. The Group recorded a valuation allowance of $25,281,000 and $58,582,000 for the periods ending June 30, 2025 and 2024, representing a $33,301,000 decrease for the period ended June 30, 2025.
A reconciliation of the beginning and ending amount of total unrecognized tax benefits for the tax years ended June 30, 2025, 2024 and 2023 is as follows:
| (in USD thousands) | Years ended June 30, | ||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Balance, beginning of year | $ | — | $ | — | $ | — | |||||||||||
| Increase/(Decrease) related to prior year tax positions | 214 | — | — | ||||||||||||||
| Increase related to current year tax positions | 1,239 | — | — | ||||||||||||||
| Balance, end of year | $ | 1,453 | $ | — | $ | — | |||||||||||
As of June 30, 2025, the total amount of unrecognized tax benefits was $1,453,000. If the unrecognized tax benefits were recognized as of June 30, 2025, there would be a 1,453,000 favorable impact that would affect the effective rate.
The Group files tax returns on a timely manner as prescribed by the tax laws of the jurisdictions in which it operates on a fiscal year ending 30 June. Other than matters noted elsewhere in the financial statements, the Group is not currently subject to any revenue authority tax audits.
As at June 30, 2025 the Group had carried forward tax losses as follows:
(in local currency thousands) | ||||||||||||||||||||
| Jurisdiction - Currency | Revenue Losses | Capital Losses | Expiry/Limitation | |||||||||||||||||
| Australia - AUD | $ | 40,491 | $ | — | No expiry or limitation | |||||||||||||||
| USA - USD | 538,284 | — | No expiry but deduction limited to 80% of Taxable Income in any given tax year | |||||||||||||||||
| Canada - CAD | $ | 137,861 | $ | 2,224 | Revenue Losses - carry forward up to 20 years and will commence expiry in 2040 Capital Losses carry back three years and forward indefinitely to offset capital gain | |||||||||||||||
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.