Income taxes

9 Months Ended

Mar. 29, 2024

Income Tax Disclosure [Abstract]

Income taxes

Income taxes

As of March 29, 2024 and June 30, 2023, the liability for uncertain tax positions including accrued interest and penalties was $1.2 million and $1.5 million, respectively. The Company expects the estimated amount of liability associated with its uncertain tax positions to increase within the next 12 months due to additional provisions associated with uncertain tax positions from one of the Company's subsidiaries and interest on these positions.

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 March 29, 2024 and March 31, 2023 was 2.9% and 6.5%, respectively, of net income. The decrease was due to a decrease in income subject to tax during the three months ended March 29, 2024 as compared to the three months ended March 31, 2023.

The effective tax rate for the Company for the nine months ended March 29, 2024 and March 31, 2023 was 5.0% and 3.1%, respectively, of net income. The increase was primarily due to a full valuation allowance of $2.1 million for deferred tax assets being set up during the nine months ended March 29, 2024 due to management's belief that the Company's subsidiary in Israel would continue to have losses in the foreseeable future such that the deferred tax assets of such subsidiary would not be utilized. In addition, a full valuation allowance of $1.6 million from the Company's subsidiary in the U.K. was released during the nine months ended March 31, 2023.