Weaker economic conditions lead to $8.2bn drop in taxes paid by corporates

The ATO said that slower economic growth contributed to mixed performance among corporate taxpayers, with tax payable in the corporate tax transparency population decreasing by $8.2 billion to $87.5 billion, compared to the previous year.

While all other industry segments recorded an increase in tax paid, the ATO said that the mining, energy and water segment saw a decline.

"This was primarily driven by weaker commodity prices, particularly for diversified miners, coal and metal ore miners who showed the largest declines in tax payable," the Tax Office said.

Despite the decline in profitability, the mining industry was still the largest contributor to tax payable for the 2024–25 income year.

Major banks performed strongly over the year, with higher interest rates supporting increased profitability and higher tax payable.

Despite lower oil and gas prices, the report indicated that the oil and gas industry paid slightly more tax than in the previous year.

The ATO said that the increase was driven by more companies moving to a tax-paying position in 2024–25, as carry-forward loss balances continue to be depleted.

"The oil and gas sector paid $10.6 billion in tax for 2024–25, the second-largest contribution since corporate tax transparency began," it said.

ATO acting deputy commissioner Michelle Sams said that while the tax revenues from corporates were lower, there were strong levels of tax compliance among corporate entities.

"Tax revenues from this demographic are inherently linked to broader economic trends. The results continue to reflect strong levels of voluntary compliance," said Sams.

"The small year-on-year reduction in tax paid is predominantly due to reduced profitability of miners flowing from lower commodity prices. The effectiveness of ongoing investment in the Tax Avoidance Taskforce over many years has also ensured large businesses pay the right amount of tax."

Sams said the majority of Australia’s largest companies are paying the right amount of tax and meeting their tax obligations.

"We continue to take firm action where we identify non-compliance," she said.

She also noted that the proportion of large corporates paying no income tax dropped to 27 per cent in 2024–25, its lowest level since corporate tax transparency reporting began.

"This in part reflects the continued effort of the Taskforce to hold large businesses to account," Sams said.

"It’s important to remember that a nil tax result doesn’t automatically imply wrongdoing. Many large businesses legitimately pay no income tax, but we continue to scrutinise these outcomes closely, as the community expects.

Community confidence exists when the public can see that Australia’s largest businesses are contributing to the tax system in the knowledge that the ATO closely monitors compliance and takes action against those that don’t pay the right amount of tax."