Australia: More than a third of big companies paid no tax in 2014-15

Qantas tops the list of more than 1,900 companies, while revenue from the petroleum resource rent tax plummets

More than 35% of the largest public companies and multinational entities paid no tax in Australia in the most recent financial year on record, according to the second transparency report published by the Australian Taxation Office.

Qantas Airways, for the second year in a row, was the company with the highest total income to have paid no tax, followed by Origin Energy, Lend Lease and ExxonMobil Australia.

Abbot Point Terminal Holdings – associated with the controversial Queensland coalmine belonging to the Adani Group – paid no tax but generated $350m in revenue.

The ATO data release covers the 2014-15 financial year, revealing key details of more than 1,900 of the largest companies with operations in Australia.

It lists the total income, taxable income and tax payable for each entity.

It stresses a company has not necessarily done anything wrong if it has not paid tax on its taxable income.

It says while the majority of entities in the data made profits and paid tax in 2014, sensitivity to economic conditions, reinvestment back into the business, distribution of profits to other entities within the broader group, tax deductions and tax offsets can affect the amount of taxable income and tax payable.

But it shows of the 1,904 companies in the database, 36% paid no tax (15% due to accounting loss, 7% to tax losses, 7% to prior year losses, and 7% to offsets).

It also reveals the proportion of companies that paid no tax in 2014-15, at 36%, was unchanged from the previous year.

Mark Zirnsak from the Tax Justice Network said that indicated more work needed to be done.

“We’re not seeing a change in the proportion of companies that paid no tax, so there’s still a long way to go before every company is paying the tax it should be paying,” he said.

The data also reveals details of the controversial petroleum resource rent tax, which will be subject to two separate inquiries next year following concerns it is failing to generate adequate revenue.

The ATO data shows revenue from the PRRT plummeted by 32% in 2014-15, a decline of $576m, despite significant growth in export production.

The Tax Justice Network, which has been leading a push to overhaul the PRRT, says the data shows multinational oil companies are exploiting and exporting Australia’s natural resources for free.

“Just two companies, BHP and Exxon, paid 77% of the total PRRT payments, which appear to be from Bass Strait oil production,” spokesman Jason Ward said on Friday.

“Neither Shell nor BP made any PRRT payments, while fellow oil and gas giants Exxon and Chevron paid no corporate tax.

“For the second year running, the ATO data reveals that Chevron, Australia’s largest foreign investor and partner in the North West Shelf project, made no corporate income tax payments or PRRT payments,.”

The treasurer, Scott Morrison, announced a formal review of the PRRT regime last month. The Senate will also conduct its own inquiry next year.

Morrison acknowledged revenues from the PRRT had halved since 2012-13, while crude oil excise collections had fallen by more than half.

When he announced his inquiry into the tax, he said he wanted it to be completed in time for next year’s budget.

Chris Jordan, the ATO commissioner, said on Friday he could not talk about individual companies, but there were “no surprises” when it came to companies paying little or no tax in 2014-15.

“We continually engage with the top 100 public or foreign companies and have categorised six of these in the highest-risk quadrant,” he said.

“The establishment of the tax avoidance taskforce in this year’s budget has bolstered our efforts in ensuring multinational, and large public and private groups operating in Australia pay the right amount of tax.”

A Qantas spokesman said the ATO had advised the airline it had met all of its tax obligations.

“The reason we paid no company tax in 2015 is because we’re working through financial losses, chiefly our record loss of $2.8bn in 2014,” he said.

“The tax system allows companies and individuals to claim tax credits against these kinds of losses. In other words, no company tax was paid by Qantas in 2015 because no company tax was owed.

“Our recent profits mean we’re more than halfway through our tax losses. As this profitability continues, we will resume paying company tax.”

Breaking the data into industry segments, the ATO shows total tax payable for the banking and finance industry increased by $1.7bn in 2014-15, compared to the previous year, followed by the manufacturing ($749m), sales and service ($416m), and insurance and superannuation ($177m) industries.

But the total tax payable for the energy and resources industry declined by $3.2bn.

The ATO said in 2014–15, commodity prices declined significantly, reflecting decreasing global demand for energy resources and the gradual slowing in China’s economic growth. Economic conditions improved for manufacturers as the exchange rate declined from previously high levels.

“As a result, tax payable for the energy and resources segment of the corporate transparency population declined considerably, while the manufacturing and financial services segments experienced the strongest growth,” the ATO said.

Jennifer Westacott, the chief executive of the Business Council of Australia, said companies should pay every dollar of tax required of them, but the ATO data should also be interpreted with care.

“Companies do not pay company income tax on revenue – they pay it on profits after paying all expenses including wages, capital replacement, supplier costs, fleet costs and other operating expenses,” she said.

“Many small- and medium-sized businesses, in particular, do not make a profit in a given year, and even large businesses go through cycles where profits from major investments take time to be realised. Around 20 to 30% of ASX 500 companies report a loss in any given year.”