Income taxes

6 Months Ended

Dec. 29, 2023

Income Tax Disclosure [Abstract]

Income taxes

Income taxes

As of December 29, 2023 and June 30, 2023, the liability for uncertain tax positions including accrued interest and penalties was $2.5 million and $1.5 million, respectively. The Company expects the estimated amount of liability associated with its uncertain tax positions to decrease within the next 12 months following the closure of tax audit in certain jurisdictions for fiscal year 2019 and fiscal year 2020.

The Company files income tax returns in the United States and foreign tax jurisdictions. The tax years from 2016 to 2022 remain open to examination by U.S. federal and state, and foreign tax authorities. The Company’s income tax is recognized based on the best estimate of the expected annual effective tax rate for the full financial year of each entity in the Company, adjusted for discrete items arising in that quarter. If the Company’s estimated annual effective tax rate changes, the Company makes a cumulative adjustment in that quarter.

The effective tax rate for the Company for the three months ended December 29, 2023 and December 30, 2022 was 5.2% and 1.7%, respectively, of net income. The increase was due to an increase in income subject to tax during the three months ended December 29, 2023 as compared to the three months ended December 30, 2022. In addition, our subsidiary in the U.K. generated taxable income and was able to utilize loss carryforwards. Management determined that it was more likely than not that future taxable income would be sufficient to allow utilization of the deferred tax assets. Thus, a full valuation allowance of $1.6 million for the deferred tax assets was released during the three months ended December 30, 2022.