More than 1,000 large companies paid no tax in Australia, ATO reveals

Almost 30 per cent of large companies paid no tax in 2024-25, an Australian Taxation Office (ATO) report reveals.

The ATO's 10th corporate tax transparency report, which covers 4,299 entities that lodged tax returns two financial years ago, found there were 1,149 entities (27 per cent) that did not pay tax.

That left 3,150 (73 per cent) that did pay tax as the Australian economy faced slow growth, declining commodity prices and high interest rates.

These conditions contributed to a mixed performance among corporate taxpayers, with tax payable decreasing by $8.2 billion (8.6 per cent) to $87.5 billion, compared to the previous year.

The report highlights various explanations, including companies making an accounting loss or claiming tax offsets that reduced their tax bill to zero.

ATO acting deputy commissioner Michelle Sams said there were legitimate reasons why a company may pay no income tax.

"'It's important to remember that a nil tax result doesn't automatically imply wrongdoing," she said.

"Many large businesses legitimately pay no income tax but we continue to scrutinise these outcomes closely, as the community expects."

Ms Sams said the proportion of large corporates paying no income tax was now the lowest level since corporate tax transparency reporting began in 2013-14. In that year the percentage of companies that paid no tax was 36 per cent.

AI companies under scrutiny over data centres

About 140 countries including Australia previously signed up to the Organisation for Economic Cooperation and Development (OECD) Global Minimum Tax deal, a plan more than a decade in the making.

The tax deal imposes a minimum rate of 15 per cent on the profits of multinationals, aiming to end the days of "no-tax havens".

While the deal requires companies to pay that as a minimum on corporate profits, it's nevertheless a significant difference, considering the corporate tax rate in Australia is 30 per cent.

Ms Sams said the ATO was using all its resources to stop profit shifting.

Since its establishment in 2016, she said the agency's Tax Avoidance Taskforce has collected $36 billion in additional tax revenue from multinationals, and large public and private businesses.

"We've got a big program of review and audit, 100 to 150 at any one time,"

Ms Sams said.

The ATO was focusing on companies that use offshore financing and marketing hubs, as well as AI businesses.

"Increasingly we're being more focused on things like digital business models and supply chains, including the growth of cloud computing and [the] data hosting industry," Ms Sams said.

"Given the significant infrastructure, customers and economic activity in operating in data centres, that's an area that we're looking at to make sure the tax outcome is appropriate."

She said royalty arrangements held by multinationals were also under focus.

"For example, where we see big payments to related party offshore, we want to look to make sure that we understand the nature of that payment where it reduces profit subject to tax in Australia." 

Ms Sams said when foreign private equity firms dispose of assets, "we're looking to see, is that when there's a gain made … and that the appropriate amount of taxes are paid on that gain".

Mining and energy sector paid most tax

The ATO is required by law to publish tax information reported by certain large corporates each year.

The 2024-25 report covers 4,299 corporate entities, of which:

• 1,824 are foreign-owned companies, with an income of $100 million or more
• 593 are Australian public entities, with an income of $100 million or more
• 1,882 are Australian-owned resident private companies, with an income of $100 million or more.

The ATO said tax payable continues to be highly concentrated in a small number of large entities.

Despite being the only segment to decline in tax payable again for 2024-25, the mining, energy and water segment continues to be the largest contributor.

The ATO said 41.1 per cent ($35.9 billion) of total tax payable in the corporate transparency population was paid by the mining, energy and water segment, a 25.8 per cent ($12.5 billion) decrease from the prior year.

Petroleum resource rent tax collection up

Despite lower oil prices in 2024-25, petroleum resource rent tax (PRRT) collections increased from the previous year.

This was mainly driven by the increase in PRRT taxpayers paying the tax under the deductions cap.

PRRT payable increased by more than 26 per cent, rising from $1.48 billion in 2023-24 to $1.87 billion in 2024-25, marking the second highest amount since reporting began.

Corporate tax paid by the oil and gas segment for the year was $10.6 billion, the sector's second highest contribution since reporting began.