Industry segment

Australia’s largest corporate entities tend to operate in segments of the economy characterised by a high degree of capital intensity and economies of scale. Different economic performance factors affect particular segments of the economy at different points in the economic cycle.

Cyclical factors have influenced the tax performance of the mining, energy and water segment in recent years. Significant project construction costs can result in material deductions during the construction phase, when a project is not yet generating revenue. Such projects typically also have high levels of depreciation in their early years when revenue is still ramping up. This can result in the generation of tax losses which can be carried forward for a number of years.

Some cyclical factors can be seen in Figure 17 and Table 5 which show a higher percentage of nil tax payable entities compared to other segments. Similarly, corporate entities in the manufacturing, construction and agriculture segment may experience extended periods of incurring costs before income is generated from projects. This has resulted in them also having a higher proportion of nil tax payable entities than other segments.

Tax payable in the corporate tax transparency population was again dominated by the mining, energy and water segment in 2018–19, followed by the banking, finance and investment segment. The share of tax payable attributable to the mining, energy and water segment was again higher than in previous years, primarily due to high iron ore prices.

Figure 17: Corporate entities, by industry segment, 2018–19