Almost one-third of large corporations paid no income tax in Australia in 2020-2021, including more than half of the nation’s major mining, energy and water companies, a new report shows.
The Australian Taxation Office released its annual tax transparency report on Thursday, which reveals the amount of tax paid by 2,468 large and medium corporate entities. Of those, 782 (32%) paid no tax at all in the financial year, down from a high of 36% in 2015-16.
An industry breakdown shows more than half of the mining, energy and water companies included in the report paid no income tax in 2020-2021.
That includes Adani Mining Pty Ltd, one AGL entity, Alcoa Australian Holdings, Ampol, Anglo American Australia, ExxonMobil Australia, two Glencore entities, a Peabody Australia holding company, Santos, two Shell energy entities, Whitehaven coal, Woodside Petroleum, and Yancoal Australia.
Chevron paid just $30 of income tax in Australia, according to the report, despite having a total income of $9.1bn and a taxable income of $113m.
The proportion of mining, energy and water companies paying no income tax increased in 2020-2021 to a three-year high. The report makes clear that there are genuine and legitimate reasons why some companies might not pay income tax, including “even extremely large companies”, which would “sometimes not make a profit in a year when they expand or face challenging market conditions”.
Losses from prior years can also be carried forward and deducted from profits in future years, and corporations can use tax offsets to reduce the amount of tax they pay to zero.
But the ATO deputy commissioner, Rebecca Saint, said the ATO paid “close attention to companies not paying tax”.
“We hold those companies that report continual year-on-year losses to an additional layer of scrutiny,” she said.
“While it’s true some large entities paid no income tax, we’re seeing through our justified trust program that there are high levels of compliance by these entities, and taking decisive action where there’s not.”
In some cases, individual entities that sit within a larger corporate structure will not have paid tax, but other entities that are part of the taxpaying corporate group have done so.
“When we look at a corporate entity, we look at the entire economic group structure and which entities are paying tax,” the report says. “When we analyse this population at the group level, the percentage with nil tax payable drops from 32% to 20% because at least one entity in the group did pay tax.”
The report released on Thursday covers 1,376 foreign-owned companies with an income of $100m or more, 563 Australian public entities with an income of $100m or more, and 529 Australian-owned resident private companies with an income of $200m or more.
The ATO says that the 2,468 corporate entities paid a combined $68.6bn in income tax in 2020-21. That is a significant increase in tax on the year prior and the highest since reporting began.
“High commodity prices were once again the key driver of the increase in corporate tax payments,” the ATO said.
Receipts from the petroleum resources rent tax increased by 5% in 2020-2021 to $926m. The PRRT currently covers 10 companies.
“The increase in PRRT payable reflects the increased profitability of PRRT-liable companies in 2020–21, with oil prices being a key driver,” the report says.
The report also says Australia had some of the world’s highest levels of tax compliance, with 93% of tax paid voluntarily by large businesses. The rate rose to 96% after compliance activities by the ATO.
“These results demonstrate there are high levels of tax compliance amongst our largest corporates,” Saint said.
Guardian Australia has approached Adani, AGL, Alcoa, Ampol, Anglo American, Chevron, ExxonMobil, Glencore, Peabody, Santos, Shell, Whitehaven, Woodside Petroleum and Yancoal for comment.
AGL said it had paid $524m in taxes in 2020-21, including corporate income tax instalments of $106 million, and that its effective tax rate on underlying profits was broadly in line with Australia’s 30% corporate tax rate.
Chevron said it understood the concern about companies paying their fair share of tax and said it was forecasting it would pay $3.7bn as its massive Gorgon and Wheatstone projects move from construction into full production in 2022.
“Historical tax losses associated with the more than $80bn development of the Gorgon and Wheatstone natural gas projects have been extinguished, and we’re now making tax payments of more than $100m each month,” a spokesperson said.
Santos said it paid US$275m in taxes in 2020 and will release its 2021 tax disclosure report “in the near future”.
Glencore said 2020 was a year of significant reduction in demand due to the pandemic, which had an “impact on the profitability of our Australian business”.
“Glencore has a number of incorporated joint ventures and other shareholdings. As such, we do not file a single Australian group tax return,” a spokesperson said.
“For the reporting period ending 31 December 2020, six Glencore entities are listed within the ATO data which had income tax payable of $22,865,050.”
While Woodside Petroleum paid no corporate income tax in 2020-2021, its two Burrup subsidiaries paid about $390m.
