PERTH (miningweekly.com) – The Minerals Council of Australia (MCA) has revealed that minerals industry faced a tax ratio of 47% during 2013-14, including company taxes and royalties, amid claims from the Australian Taxation Office (ATO) that a number of resource companies had not paid any tax during the same period.

The ATO on Thursday revealed the total income, taxable income and tax payable for a number of firms reporting a total income of over A$100-million.

Of the more than 1 500 large corporations listed by the ATO, some 579 entities paid no tax during the period, including oil and gas major Chevron Australia, iron-ore producer Atlas Iron, Beadell Resources, Energy Resources of Australia, Whitehaven Coal, and Straits Resources.

However, the ATO pointed out that no tax paid did not necessarily reflect a tax avoidance.

Meanwhile, a 2015 Minerals Industry Tax Survey, commissioned by the MCA and undertaken by Deloitte Access Economics, found the tax ratio the miners faced during 2013-14 was an equal record high for the survey, and did not include others taxes, such as the now abolished minerals resource rent tax and the carbon tax, which were also levied in 2013-14.

Deloitte Access Economics noted in its survey report that the minerals sector paid nearly half of every dollar of profit as royalties and company tax to state and federal governments in Australia.

The report showed that the royalty ratio of 24% exceeded the company tax ratio for the second year in a ro. Prior to that, company taxes exceeded royalties.

“With the tax reform debate in full swing, this survey demonstrates that mining is among the highest taxed industries in Australia,” said MCA CEO Brendan Pearson.

“With other countries taking steps to improve their tax competitiveness, Australia needs further tax reform to ensure it remains a competitive destination for mining investment.”

As part of the survey, the MCA also commissioned Deloitte Access Economics to provide updated industry-wide estimates for company tax and royalties in 2014-15.

Results suggested that revenues to government in 2014-15 were estimated to have fallen as commodity prices and profits declined sharply. Nonetheless, at A$12.6-billion in company tax and royalties, they were significantly higher than in the years preceding the mining boom.

Some A$8.4-billion of this figure would be levied in royalties alone.

Pearson said on Thursday that taxes paid have moved in tandem with total revenues peaking in 2011-12, at A$24.5-billion, with commodity prices. This underlined the fact that company tax worked effectively as a ‘profits tax’.

“Over the decade from 2005-06 to 2014-15, the minerals industry paid an estimated A$165-billion in federal company tax and state royalties alone. That’s roughly equivalent to federal spending on higher education and schools and more than was spent on public hospitals and childcare over the same period,” Pearson added.

The Queensland Resources Council (QRC) said on Thursday that the MCA’s report was a wake-up call.

“It is important that the community recognises that many minerals operations continue to pay substantial amounts in royalties to state governments.

“We know from the recent Queensland Mid-Year Fiscal and Economic Fiscal Review that over the four years of the state treasury forward estimates, coal alone is expected to deliver A$8.3-billion in royalties,” said QRC CEO Michael Roche.

He added that despite the low oil price, as liquefied natural gas exports ramped up, the gas sector was set to deliver nearly half a billion dollars in royalties in 2018-19.

“In the recent release of the QRC’s economic contribution data we found that our sector is directly and indirectly responsible for one in every five dollars in Queensland’s economy and one in every six jobs and A$2.1-billion in royalties that is used to fund public infrastructure, schools and hospitals,” Roche said.

The Australian Petroleum Production & Exploration Association (Appea) said that claims that the Australian oil and gas industry was not paying its fair share of taxes was wrong, and ignored the facts.

“Over the last decade, the level of tax paid (both company tax and resource taxes) has averaged around 50% of the industry’s pre-tax profit.  This is far higher than most other industries in Australia,” Appea said in a statement. 

The industry body pointed out that since the 1970s the industry has paid, in today’s dollars, an estimated A$250-billion in taxes and resource charges to governments across Australia.

“The industry is subject to numerous taxes and resource imposts, many of which are not included in the information released today in the ATO’s corporate tax transparency report. 

“As indicated in the supporting material released by the ATO, there are many factors that affect how much and when tax is paid by companies.”

Appea noted that this was particularly important for the oil and gas industry in recent years, as the industry had made unprecedented upfront investments in new capacity. 

“The combination of major costs and very low commodity prices naturally reduces profits and therefore tax payments.

“When there are no profits to tax – such as during a project’s construction or early production phases - no tax is owed. Projects with significant investment costs will take many years before all of these costs are recovered and the first profits are made.”