The increase in tax payable across the CTT population this year was primarily driven by the mining, energy and water segment (see Figure 9) – in particular, strong commodity prices and export volumes. There were declines in tax payable in banking, finance & investment and in insurance. There was low growth in manufacturing and wholesale retail services, reflecting more challenging economic conditions in 2019–20 and a softening in non-mining sector corporate profits in recent years.
Figure 9: Change in tax payable, by industry segment
Economic factors can affect the performance of an industry segment in a given year. The insurance segment was affected by a number of natural disasters in 2019–20. The banking, finance and investment segment is facing increased regulatory expenses and reduced revenues. Cyclical factors can affect any business but especially the tax performance of the mining, energy and water segment. Significant project construction costs can result in material deductions during the construction phase, when a project is not yet generating revenue. This can result in the generation of tax losses which can be carried forward for a number of years.
Refer to Why some corporations pay no tax for more information.