Why 27% of Big Companies Pay Zero Tax: ATO 2026 Report

On 1 October 2026, the Australian Taxation Office (ATO) published its annual Corporate Tax Transparency report for the 2024–25 financial year, providing an audited record of corporate tax contributions. Covering 4,299 corporate entities reporting Australian income of AUD $100 million or more, the disclosures arrive at a sensitive fiscal moment. Total corporate income tax collected fell to AUD $87.5 billion, down from previous commodity-fuelled peaks due to lower global prices for iron ore, metallurgical coal, and thermal coal.

Yet the headline commanding public attention was the persistence of zero-tax filings. Of the 4,299 large entities examined, 27 per cent—representing over 1,100 commercial operations—paid nil Australian corporate income tax for the year. This sparked immediate parliamentary debate, particularly among pay-as-you-go (PAYG) wage earners whose personal tax payments fund an expanding share of Commonwealth services.

Conversely, the ATO and corporate treasurers emphasise that gross commercial revenue differs fundamentally from statutory taxable income. While the 27 per cent figure remains politically combustible, the ATO highlighted that it represents the lowest proportion of nil-tax entities since reporting began twelve years ago, down from 36 per cent in 2013–14. Deciphering why over a quarter of large entities pay zero tax requires examining statutory depreciation schedules, multi-year capital cycles, resource rent deduction shields, and cross-border profit shifting, as explored in our national economic coverage.

Inside the 2026 Ledger: Commodity Softening and Historic Lows in Nil-Tax Entities

The 2026 report covers 4,299 public, private, and foreign-owned corporate entities reporting gross revenue of AUD $100 million or more.

Metric	2023–24 Previous Cycle	2024–25 (Reported Oct 2026)	Directional Movement
Total Reporting Entities	3,985 entities	4,299 entities	+314 entities (+7.9%)
Aggregate Gross Total Income	AUD $2.65 trillion	AUD $2.82 trillion	+AUD $170 billion
Aggregate Statutory Taxable Income	AUD $342 billion	AUD $301 billion	-AUD $41 billion (-12.0%)
Total Corporate Income Tax Payable	AUD $98.2 billion	AUD $87.5 billion	-AUD $10.7 billion (-10.9%)
Proportion Paying Nil Corporate Tax	31 per cent	27 per cent	-4.0 percentage points
Top 10 Payers Share of Total Tax	52 per cent	49 per cent	Highly concentrated base

The AUD $10.7 billion contraction in corporate tax payable to AUD $87.5 billion illustrates the volatility of federal receipts. While commercial banks sustained steady payments through resilient lending margins, remittances from iron ore and coal miners dropped as export commodity prices softened.

Nevertheless, nil-tax entities reached an all-time low. When reporting began in 2013–14, 36 per cent of entities paid zero tax. That share dropped to 32 per cent in 2017–18, 31 per cent post-pandemic, and 27 per cent in 2026.

The ATO estimates the net corporate tax gap for large groups remains below 4.0 per cent post-compliance interventions, reflecting over 96 per cent compliance. Yet acute concentration persists: the top 10 corporate taxpayers generated nearly half of the entire AUD $87.5 billion total. Commonwealth revenues remain heavily dependent on mining giants BHP and Rio Tinto alongside the major banks, creating fiscal vulnerability during global downturns, as detailed in our macroeconomic analysis.

The Nil-Tax Roster: Energy Titans and Digital Conglomerates Under Scrutiny

Public scrutiny centres on recognizable corporate brands reporting zero tax payable. In the 2024–25 cohort, nil-tax filings remain clustered within capital-intensive extractive operations and multinational technology providers.

Extractive Resources and Fossil Fuel Producers

Resource extraction and energy ventures dominate the zero-tax schedule:

• Santos Limited: Australian oil and gas producer Santos recorded its eleventh consecutive year of paying zero Australian corporate income tax. Despite substantial domestic and export revenue, Santos offset taxable earnings against carried-forward exploration losses and capital expenditure deductions.
• Inpex Ichthys LNG: The Inpex-operated Ichthys offshore LNG project off Western Australia and the Northern Territory paid zero corporate tax. Having absorbed over AUD $65 billion in capital construction, the venture continues to amortise heavy capital outlays and service project debt.
• Bravus Mining & Resources: Formerly Adani Mining, Bravus paid zero corporate income tax, extending its run of nil tax payments since the Carmichael thermal coal mine in Queensland opened in 2021. Operating revenues were absorbed by capitalised development, rail deductions, and debt.

Digital Platforms and Telecommunications

Outside the resources sector, digital platforms and telecommunications networks recorded notable zero-tax outcomes:

• Microsoft Data Centre Entities: Microsoft’s Australian infrastructure entities housing cloud and AI data centres reported zero taxable income, utilising accelerated depreciation on server equipment alongside intercompany procurement charges.
• Netflix Australia: The streaming subsidiary reported minimal taxable income relative to its subscriber base. While collecting hundreds of millions locally, most subscription turnover is remitted offshore via content licences and management charges.
• Singtel Optus: The telecommunications provider, owned by Singaporean parent Singtel, incurred zero corporate tax liability. Network investments in 5G infrastructure combined with interest deductions on intercompany debt eliminated statutory taxable profit.

The presence of these titans on the nil-tax roster fuels public resentment, as wage earners facing marginal tax rates up to 47 per cent question why multi-billion-dollar firms remit zero corporate tax.

The Accounting Machinery: How Billions in Turnover Yield Zero Taxable Income

The gap between gross turnover and tax payable stems from the Income Tax Assessment Act 1997. In Australia, corporate tax is levied at 30 per cent on statutory taxable income, not gross receipts. Taxable income represents assessable income minus allowable deductions. When deductions equal or exceed assessable revenue, taxable income falls to zero.

Carried-Forward Tax Losses and Multi-Year Capital Cycles

The most common legitimate driver of zero tax is carried-forward losses. Extractive and infrastructure ventures operate on multi-decade capital cycles. An offshore gas platform, subsea pipeline, or rail corridor requires five to ten years of construction, absorbing tens of billions of dollars before generating commercial revenue.

During construction, companies accumulate substantial statutory tax losses. Under Australian law, commercial enterprises can carry forward tax losses indefinitely to offset future earnings, provided they satisfy the Continuity of Ownership Test (COT) or the Similar Business Test (SBT). When operations commence, profits are sheltered against past losses until historical deductions are exhausted.

Statutory Depreciation and Capital Allowances

Under Division 40 of the tax act, corporations deduct the depreciating value of physical assets over their effective economic lives. For asset-intensive enterprises—such as data centre operators replacing servers every three years or miners acquiring haul fleets—annual depreciation write-offs frequently offset operational earnings.

Furthermore, successive Commonwealth stimulus initiatives, including temporary full expensing and accelerated investment allowances, allowed businesses to write off capital asset costs immediately. While these programmes stimulated private investment, they created multi-year deduction reserves that continue to shelter current corporate earnings.

Base Erosion vs Legitimate Recovery: PRRT Shields, Thin Capitalisation, and Royalties

While multi-year capital expenditure represents legitimate investment, other mechanisms that generate nil-tax outcomes occupy a disputed boundary between statutory relief and strategic base erosion:

The Petroleum Resource Rent Tax Deductions Shield

The Petroleum Resource Rent Tax (PRRT) is an assessable profits-based tax of 40 per cent on offshore petroleum projects. PRRT liabilities are deductible against corporate income tax. In practice, however, major export LNG projects have paid neither PRRT nor corporate tax for extended operational periods.

The primary cause was compounding unused exploration and development deductions. Historically, unabsorbed general deductions compounded annually at the Long Term Bond Rate (LTBR) plus 5 percentage points, while exploration expenditure compounded at LTBR plus 15 percentage points. In a low-rate environment, these compound uplift rates created multi-billion-dollar deduction shields that sheltered projects for decades. While the Commonwealth introduced an integrity cap in 2023 limiting deductible offsets to 90 per cent of assessable LNG receipts, this reform targets the rent tax itself, leaving baseline corporate income tax sheltered by general capital write-offs.

Thin Capitalisation and Cross-Border Debt Loading

Multinational groups have historically loaded Australian subsidiaries with internal debt issued by offshore affiliates in low-tax jurisdictions. High interest payments were remitted overseas as deductible expenses, compressing domestic profits while leaving interest income taxed lightly abroad.

To counter this, Australia overhauled its thin capitalisation regime from 1 July 2023, replacing the 60 per cent debt-to-asset safe harbour with OECD-aligned earnings limits:

• Fixed Ratio Test: Restricting net debt interest deductions to 30 per cent of tax EBITDA.
• Group Ratio Test: Permitting deductions aligned with the multinational group’s overall third-party net gearing ratio.
• Third-Party Debt Test: Disallowing deductions for internal intercompany loans entirely, restricting tax deductibility to external commercial borrowing.

While these reforms curtailed artificial internal gearing, corporate groups continue to deploy external borrowing to shelter earnings amidst elevated interest rates, as detailed in our corporate finance analysis.

Transfer Pricing and Offshore Royalty Conduits

For digital platform operators, profit shifting has centred on intellectual property (IP) licensing and service charges. Proprietary software codes and brand trademarks are domiciled in low-tax jurisdictions, with Australian operating subsidiaries paying substantial licensing royalties to distribute digital services locally.

The ATO has deployed the Multinational Anti-Avoidance Law (MAAL) and Diverted Profits Tax (DPT) to challenge artificial distribution structures. Although tech multinationals now book subscription revenue directly within Australia, substantial deductions for imported technology licences and offshore shared services continue to compress domestic taxable profit.

Global Minimum Tax and Enforcement: Can OECD Pillar Two Close the Gaps?

To address cross-border profit shifting, the Commonwealth has implemented the OECD/G20 Two-Pillar Solution, introducing the Pillar Two global minimum tax regime into Australian law.

Pillar Two establishes a 15 per cent global minimum effective corporate tax rate for multinational enterprise (MNE) groups with consolidated annual revenues of €750 million (approximately AUD $1.25 billion) or more. Australia enacted legislation introducing a Domestic Minimum Top-Up Tax (DMT) alongside the Income Inclusion Rule (IIR) for income years starting on or after 1 January 2024, followed by the Undertaxed Profits Rule (UTPR) for income years starting 1 January 2025.

Under the Domestic Minimum Top-Up Tax, if an Australian subsidiary’s Effective Tax Rate (ETR) drops below 15 per cent under GloBE rules, the ATO levies a top-up tax to bring the liability to 15 per cent. This ensures the Australian Treasury captures the minimum tax rather than forfeiting it to foreign parent tax authorities.

However, Pillar Two does not mean every large corporation will pay 15 per cent cash tax in the transparency release. Two structural features preserve zero-tax outcomes for capital projects:

• Substance-Based Income Carve-Outs: GloBE model rules exclude a predetermined percentage of income derived from tangible assets and payroll expenses. Capital-heavy mining projects, infrastructure facilities, and data centre developments benefit directly from these carve-outs.
• Treatment of Timing Differences and Genuine Losses: Pillar Two accommodates deferred tax balances and temporary timing differences. It does not penalise companies for claiming legitimate statutory depreciation or historical losses. An enterprise that reports zero statutory taxable income due to heavy capital investment will continue to show nil tax payable without triggering a GloBE top-up tax.

Concurrently, the ATO's Tax Avoidance Taskforce continues to scrutinise cross-border supply chains, embedded royalties, and artificial marketing hub markups across corporate taxpayers.

What This Means for Australia's Fiscal Landscape and Corporate Reform

The 2026 Corporate Tax Transparency report crystallises the central economic challenge confronting Australian policymakers: maintaining an attractive, capital-competitive investment environment while safeguarding the integrity of the sovereign tax base.

Australia is fundamentally a capital-importing economy. Transitioning the energy grid, extracting critical minerals, and building digital infrastructure requires hundreds of billions of dollars in private capital. Statutory depreciation schedules and carried-forward loss rules are deliberately engineered tools designed to encourage corporations to commit balance sheets to high-risk, long-horizon projects that generate employment and industrial capacity. Imposing arbitrary minimum taxes on gross commercial revenue would severely disincentivise large-scale investment, rendering Australia uncompetitive against rival resource jurisdictions.

Yet the fiscal vulnerabilities revealed in the 2026 data cannot be ignored. When 27 per cent of the country's largest commercial entities remit zero income tax, public confidence in the fairness of the national tax compact deteriorates, particularly while ordinary households shoulder elevated interest rates and bracket creep.

Furthermore, relying on a narrow cohort of ten corporate giants to deliver half of all corporate tax receipts leaves Commonwealth finances exposed to global commodity shocks, as highlighted by the AUD $10.7 billion revenue contraction. The steady decline in nil-tax entities from 36 per cent in 2013–14 to 27 per cent in the 2026 report demonstrates that thin capitalisation reforms, anti-avoidance laws, and ATO audits are making measurable headway. Nonetheless, refining the corporate tax system to balance investment incentives with equitable revenue contributions remains Australia's defining economic priority.