The minerals industry makes a very large tax contribution in Australia. Over the past decade, it has been a major source of growth, investment, jobs and higher living standards, as well as a large contributor to government revenues.
Deloitte Access Economics estimates that the minerals industry’s contributed $165 billion in company tax and royalties to Australian government’s between 2004-05 and 2014-15.
The overall tax burden on mining projects is a key factor influencing investment decisions. Mining projects are highly capital intensive with considerable, high-risk exploration outlays, large upfront capital commitments, long-life assets, sophisticated technologies and long lead times to profitability. Securing the benefits of Australia’s comparative advantage in mineral resources requires stable and globally competitive tax arrangements.
Australia is a relatively high tax mining jurisdiction. Mining tax ratios are at or near longer term highs, while official company tax data show mining to be among the highest taxed industries in Australia.
Deloitte Access Economics calculates a mining tax ratio (combining company tax and royalties as a share of taxable income) of 47 per cent in 2013-14, above the seven year average of 43 per cent since the turn of the century. Estimated mining tax ratios have risen sharply in Australia as commodity prices have fallen and states have increased royalty rates.
A 2013 study by Goldman Sachs found that the tax take from Australian mining companies is within the top 25 per cent of mining jurisdictions. Major resource-rich competitors like Brazil, Indonesia, Canada, Peru and South Africa – as well as large producers such as China and the United States – all have lower tax rates on mining.
Company tax data from the Australian Taxation Office (ATO) confirms that mining (including oil and gas) is among the highest taxed industries in Australia. ATO data shows mining paid $12.8 billion in company tax alone in 2013-14 - 19 per cent of all company tax in Australia. After refunds and credits, the net corporate tax rate on mining has been consistently above the average of total industries. Professor Sinclair Davidson of RMIT has shown that over the decade to 2012-13, the average effective company tax rate for mining (net corporate tax as a percentage of taxable income) has remained above the average of all industries, plus one standard deviation.
Professor Davidson concludes that ‘the mining industry pays a substantial sum of money in corporate taxation and pays at a rate of close to 30 per cent of its taxable income’.
Media releases on tax issues
12 May 2015 2015-16 Budget: Minerals Council of Australia
12 May 2015 Mining and corporate tax: the official evidence
29 Apr 2015 ACF report hits at regional Australia
Recent tax reports and submissions
Dec 2015 Minerals industry Tax survey 2015