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A Third Of Australia's Largest Companies Paid No Tax In 2014/2015

But 'nil tax' doesn't mean tax avoidance.

09/12/2016 1:01 PM AEDT | Updated 09/12/2016 2:13 PM AEDT

More than a third of Australia's largest companies paid zero tax in the 2014/15 financial year, new figures show. But the Australian Tax Office says while the no tax trend looks to have continued over the 2015/16 year, it is not an necessarily an indicator of tax avoidance.

Figures from the ATO released on Friday show 36 percent of large firms had zero tax payable in 2014-15. The report notes assumptions about an entity's compliance with their tax obligations, or those of associated groups, cannot be made solely on the basis of its data.

"These figures alone do not tell the complete story of a company's tax affairs or their level of engagement with the ATO," Tax commissioner Chris Jordan said.

"There are no surprises here to the ATO."

Jordan told The ABC it was likely the trend continued over the 2015/16 financial year.

"I would expect to see a further drop in profitability of the energy and natural resources sector and a reduction in tax paid by that sector, partially offset by strengthening in other industries such as banking and finance," he said on Friday.

The report covered public and foreign firms with an income of $100 million or more and companies privately owned by Australian residents with an income of $200 million-plus.

The ATO said there are approximately 1.2 million companies operating in Australia and they reported total income tax payable of $67 billion in 2014–15.

The 1,904 corporate tax entities reported under the transparency measure represent almost two-thirds of that amount.

The ATO noted the decline in commodity prices in 2014–15, which reflected decreased global demand for energy resources and the gradual slowing in China's economic growth. Meanwhile, economic conditions improved for manufacturers as the exchange rate continued to decline from previously high levels.

"As a result, tax payable for the energy and resources segment of the corporate transparency population declined considerably, while the manufacturing and financial services segments experienced the strongest growth," the ATO said.

Labor shadow assistant treasurer Andrew Leigh questioned the Federal government's plan to give big business tax cuts when the data show almost 700 don't pay tax.

"Labor acknowledges the companies that are doing the right thing," he told The Financial Review.

"However we are concerned that the report reveals that 36 per cent of large firms paid no tax on their earnings.

"This includes 109 companies that paid no tax, despite reporting more than $1 billion in total income."

Tax Justice Network spokesperson Jason Ward said the data showed multinational corporations are not paying their fair share.

"For the second year running, the ATO data reveals that Chevron, Australia's largest foreign investor and partner in the North West Shelf project, made no corporate income tax payments or Petroleum Rent Resource Tax payments," Ward said in a statement.

"Just two companies, BHP and Exxon, paid 77 percent of the total PRRT payments, which appear to be from Bass Strait oil production. Neither Shell or BP made any PRRT payments, while fellow oil and gas giants Exxon and Chevron paid no corporate tax."

In July a report by Oxfam found multinational tax avoidance is costing Australia $6 billion in revenue every year.

It also found with 90 percent of Aussies believing harsher legislation should be introduced to stop multinational corporations avoiding paying their fair share.

In December last year parliament forcing multinational companies with a global turnover more than $1 billion to disclose financial statements with more tax details.

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