Estimates of royalties and company tax accrued in 2015-16

The royalties and company tax estimates for the 2015-16 financial year are drawn from a combination of official sources and Deloitte Access Economics estimates.

Global commodity prices continued to track through a difficult period in 2014-15, with reductions in global demand – notably including slowdown in the key market of China – meeting increases in supply.  The effects were felt across the mining industry, with accounting profits falling sharply from previous years.

Although a rebound in commodity prices began during calendar 2016, the ABS measure of mining sector profits before income tax in 2015-16 fell to just a third of its levels in 2009-10 – the year when the global financial crisis hit hardest.

The net result is that company tax payments for the minerals industry as a whole are estimated to have fallen more than $11 billion between 2013-14 and 2015-16.

Not surprisingly (given that company tax is a profit tax), these estimates continue to track the ups and downs in the ABS measure of mining profits before tax.

The company tax estimates here are also broadly consistent with those released by the Australian Taxation Office on 9 December 2016 in its 2014-15 Report of Entity Tax Information (seen in https://www.data.gov.au/dataset/corporate-transparency/resource/1e8c8ae0-81d1-4780-a669-9e4a2a6ba1a4).  Note that some major miners are involved in oil and gas operations as well as in the minerals sector.  The estimates in this report relate solely to the latter.

Over the same two-year period, and reflecting their linkage to revenues rather than to profits, royalties payments are estimated to have fallen by less than $3 billion.  Royalties payments in
2015-16 are estimated to be some 39% higher than the $5.7 billion that the minerals sector paid in 2009-10.

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