McPherson’s secures $3.3 million tax benefit following ATO review
McPherson’s Limited (ASX: MCP) has received a $1.3 million tax refund from the Australian Taxation Office (ATO), with a total tax benefit of $3.3 million expected across multiple assessment periods. The McPherson’s ATO tax refund stems from costs related to a strategic alliance announced in March 2022 now being deemed tax-deductible.
The immediate cash injection of $1.3 million arrived on 20 February 2026, one day after the company’s announcement. A further $0.7 million refund relating to the financial year ending 30 June 2024 is anticipated shortly, whilst an additional $1.3 million benefit is expected in FY26 or subsequent years, subject to the availability of taxable income.
The tax benefits arose following engagement with the ATO, which resulted in a portion of strategic alliance costs being classified as deductible under the Income Tax Assessment Act 1997. This unexpected windfall strengthens the company’s balance sheet without requiring operational effort, demonstrating proactive tax optimisation by management.
How amended tax assessments work
An amended notice of assessment occurs when the ATO revises a company’s previous tax position, either following a review or engagement initiated by the taxpayer. Companies can request the ATO to reconsider the treatment of past expenditure, particularly when there is ambiguity around whether costs qualify as tax-deductible.
In McPherson’s case, costs initially treated as non-deductible have now been reclassified as allowable deductions. This results in the company having overpaid tax in previous years, triggering refunds for those periods. The process is legitimate and reflects correcting historical tax treatment rather than a one-off accounting adjustment.
For investors, such announcements represent genuine cash windfalls that can improve liquidity, reduce debt, or fund operations without diluting equity.
Breaking down McPherson’s $3.3 million benefit
| Assessment Period | Refund Amount | Status |
|---|---|---|
| FY23 (year ending 30 June 2023) | $1.3 million | Received 20 February 2026 |
| FY24 (year ending 30 June 2024) | $0.7 million | Expected shortly |
| FY26 or subsequent years | $1.3 million | Subject to taxable income |
| Total Tax Benefit | $3.3 million |
The FY26 component of $1.3 million is conditional on McPherson’s generating sufficient taxable income to utilise the benefit. This means the timing of the final tranche depends on the company’s profitability in future reporting periods.
Strategic alliance costs unlock tax savings
The tax refunds relate to a strategic alliance announced by McPherson’s in March 2022. Following engagement with the ATO, a portion of those costs has been deemed deductible under the Income Tax Assessment Act 1997, generating cash returns from past expenditure.
For investors who have held McPherson’s (ASX: MCP) since 2022, this represents tangible financial benefit flowing from that strategic decision. It also highlights management’s diligence in optimising the company’s tax position through proactive engagement with tax authorities.
Key points include:
- ATO engagement resulted in deductibility ruling for strategic alliance costs
- Benefits split across FY23, FY24, and FY26 or later assessment periods
- No operational changes required to realise the cash inflow
Timing ahead of half-year results
The McPherson’s ATO tax refund arrives just ahead of the company’s 1H FY26 results, scheduled for release on Wednesday 25 February 2026. The $1.3 million cash refund hit the company’s bank account on 20 February, five days before the half-year reporting date.
This timing could provide balance sheet support or reduce net debt when reported. Investors will watch whether management provides commentary on how the windfall will be deployed, particularly given the additional $0.7 million expected shortly and the further $1.3 million benefit anticipated in future periods.
Reporting Timeline
McPherson’s will release its 1H FY26 results on Wednesday 25 February 2026, with $1.3 million hitting the bank just five days prior.
The announcement demonstrates that tax optimisation can deliver material cash benefits independent of operational performance. With a total potential benefit of $3.3 million, the company has strengthened its financial position heading into its half-year reporting period.
This announcement was authorised by the McPherson’s Limited Board of Directors on 19 February 2026.
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