INCOME TAXES

9 Months Ended

Jul. 31, 2019

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

INCOME TAXES

In December 2017, the United States ("U.S.") government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act contains significant changes to previous tax law, some of which became immediately effective in fiscal 2018 including, among other things, a reduction in the U.S. federal statutory tax rate from 35% to 21% (effective January 1, 2018) and the implementation of a territorial tax system resulting in a one-time transition tax on the unremitted earnings of the Company’s foreign subsidiaries. Certain other provisions of the Tax Act became effective for HEICO in fiscal 2019 including a new tax on Global Intangible Low-Taxed Income (“GILTI”), a new deduction for Foreign-Derived Intangible Income (“FDII”), the repeal of the domestic production activity deduction and increased limitations on the deductibility of certain executive compensation.

The Company’s effective tax rate in the first nine months of fiscal 2019 was 17.1% as compared to 17.9% in the first nine months of fiscal 2018. The Company's effective tax rate in the third quarter of fiscal 2019 was 22.0% as compared to 23.1% in the third quarter of fiscal 2018. The decrease in the Company's effective tax rate in the first nine months and third quarter of fiscal 2019 is mainly attributable to the reduction in the federal tax rate from a blended rate of 23.3% in fiscal 2018 to 21% in fiscal 2019, partially offset by the net effect of the provisions of the Tax Act that became effective for HEICO in fiscal 2019.

Income tax expense in both the first nine months of fiscal 2019 and fiscal 2018 was favorably impacted as a result of discrete tax benefits. The tax benefit from stock option exercises recognized in the first nine months of fiscal 2019 increased by $14.5 million compared to the first nine months of fiscal 2018. During the first nine months of fiscal 2018, the Company recognized a tax benefit from the remeasurement of its U.S. federal net deferred tax liabilities that was partially offset by a tax expense related to a one-time transition tax on the unremitted earnings of its foreign subsidiaries that resulted in an $11.9 million net discrete tax benefit.