Trends in income and tax paid
Over the last 5 years, the increase in the number of entities in each industry has been a key factor to growth in income and tax paid across all segments. The exception is Australia’s Mining, Energy and Water segment, where commodity prices and export volumes have been key contributing factors in income and tax paid.
Over the 5-year period, all industries have grown their tax payable. Tables 1 to 4 summarise the 5-year trends for tax payable, total income, taxable income, and entity counts respectively.
It is noted that the prior year industry data may differ slightly to previous reports due to a change in the allocations this year.
Tax payable
Figure 9 shows the trend in tax payable by industry segment over the past 5 years. Table 1 summarises this data.
Figure 9: Tax payable by industry segment over 5 years
Table 1: 5-year trend of tax payable by industry segment ($ billion)
|
Industry segment |
2018–19 |
2019–20 |
2020–21 |
2021–22 |
2022–23 |
|---|---|---|---|---|---|
|
Banking, Finance and Investment |
15.7 |
14.7 |
15.5 |
16.0 |
16.1 |
|
Insurance |
1.5 |
1.5 |
1.6 |
2.3 |
1.8 |
|
Manufacturing, Construction and Agriculture |
4.4 |
4.1 |
4.0 |
5.9 |
5.7 |
|
Wholesale, Retail and Services |
12.5 |
12.5 |
15.3 |
17.5 |
19.7 |
|
Mining, Energy and Water |
22.0 |
24.5 |
32.2 |
42.2 |
54.7 |
|
All industry segments |
56.1 |
57.3 |
68.6 |
83.9 |
97.9 |
Total income
Table 2 shows the total income by industry segment over the past 5 years. Total income was $3,138.4 billion in 2022–23, an increase of 23.3% on the prior year.
All segments have experienced strong growth in total income over the last 5 years, with the largest in Mining, Energy and Water. The Insurance segment experienced smaller growth compared to the other segments.
Income tax is applied to taxable income not total income. Total income generally includes all income received. Taxable income is the portion of total income that is subject to taxation. Deductions are subtracted from total income to arrive at taxable income. Deductions can vary from industry to industry. For example, retail could have a high percentage of deductions reflecting smaller gross profit margins. When commodity prices are high, mining companies can have a lower percentage of deductions relative to total income.
Table 2: 5-year trend of total income by industry segment ($ billion)
|
Industry segment |
2018–19 |
2019–20 |
2020–21 |
2021–22 |
2022–23 |
|---|---|---|---|---|---|
|
Banking, Finance and Investment |
317.4 |
312.6 |
393.6 |
320.6 |
437.6 |
|
Insurance |
106.4 |
110.9 |
115.8 |
125.8 |
134.5 |
|
Manufacturing, Construction and Agriculture |
333.7 |
342.9 |
335.6 |
376.3 |
465.7 |
|
Wholesale, Retail and Services |
934.2 |
953.9 |
974.1 |
1,110.7 |
1,365.3 |
|
Mining, Energy and Water |
437.0 |
464.2 |
473.4 |
611.6 |
735.3 |
|
All industry segments |
2,128.7 |
2,184.5 |
2,292.5 |
2,545.0 |
3,138.4 |
Taxable income
Taxable income is a company’s total income minus expenses and deductions. The amount of taxable income is affected by revenue growth and market conditions. For example, interest rate changes will affect a company’s borrowing expenses.
Table 3 shows taxable income by industry segment over the past 5 years. Taxable income was $380.1 billion in 2022–23, an increase of $38.6 billion or 11.3% on the prior year.
The Mining, Energy and Water segment is a major contributor to the overall increase in taxable income, with very strong growth over the past 5 years.
The taxable income of the Wholesale, Retail and Services segment increased significantly due to strong growth in consumer demand for these products and services.
The Banking, Finance and Investment segment reported moderate growth in taxable income over the 5-year period. This segment experienced significant challenges, including:
- restructuring and remediation costs associated with the banking Royal Commission
- a turbulent business environment during COVID-19
- rising borrowing costs in the 2022–23 income year.
Insurance has experienced patchy growth in taxable income, as the segment faced challenging economic conditions and multiple natural disasters.
Table 3: 5-year trend of taxable income by industry segment ($ billion)
|
Industry segment |
2018–19 |
2019–20 |
2020–21 |
2021–22 |
2022–23 |
|---|---|---|---|---|---|
|
Banking, Finance and Investment |
71.3 |
66.9 |
84.0 |
92.3 |
87.5 |
|
Insurance |
5.5 |
3.9 |
3.9 |
8.4 |
6.5 |
|
Manufacturing, Construction and Agriculture |
18.7 |
15.3 |
15.3 |
22.0 |
20.4 |
|
Wholesale, Retail and Services |
37.8 |
34.9 |
42.4 |
55.5 |
65.4 |
|
Mining, Energy and Water |
74.9 |
87.4 |
110.9 |
163.3 |
200.2 |
|
All industry segments |
208.2 |
208.4 |
256.6 |
341.4 |
380.1 |
Count of entities
Over the 5 years, increases in the number of entities in each industry has been a contributing factor to income and tax paid. However, in the Mining, Energy and Water segment, commodity prices and export volumes have been additional key contributing factors to the growth in income and tax paid in this segment.
Table 4 shows the number of entities by industry segment over the past 5 years.
Table 4: Number of entities by industry segment
|
Industry segment |
2018–19 |
2019–20 |
2020–21 |
2021–22 |
2022–23 |
|---|---|---|---|---|---|
|
Banking, Finance and Investment |
242 |
265 |
291 |
315 |
420 |
|
Insurance |
64 |
66 |
69 |
72 |
80 |
|
Manufacturing, Construction and Agriculture |
515 |
526 |
534 |
605 |
971 |
|
Wholesale, Retail and Services |
1,234 |
1,253 |
1,309 |
1,443 |
2,170 |
|
Mining, Energy and Water |
256 |
260 |
265 |
278 |
344 |
|
All industry segments |
2,311 |
2,370 |
2,468 |
2,713 |
3,985 |