- Australia's minerals sector drives historically high royalty and company tax revenues over last decade
- Royalties drop following lower thermal and metallurgical coal prices
- Rising operating costs and lower bulk commodity prices cut company tax take
Company tax and royalty revenue from the Australian minerals sector in 2023-24 remained strong but fell from record 2022-23 tax and royalty payments because of lower commodity prices and higher operating costs.
A new report by EY-Parthenon for the Minerals Council of Australia calculates combined royalty and net company tax payments of $63.8 billion based on actual data for the 2023-24 financial year (FY24).
This includes $36.9 billion in company tax payments and $26.9 billion in royalties, which in total is $10 billion less than the $73.8 billion in company tax and royalty revenue recorded for 2022-23 (FY23).
The report finds that the minerals sector has contributed $432 billion in company taxes and royalties over the past decade.
EY-Parthenon also estimates that the company tax and royalty revenue from Australia's minerals sector will reduce further in FY25 to $48.9 billion.
A fall in commodity prices of 13.4 per cent in FY24 means that while revenues have eased from recent highs, they remain substantially above historical levels based on high prices for some commodities.
Mining is Australia's largest taxpayer by industry, and accounts for more than a quarter of all company tax paid in FY24.
This helps to pay for education, health, police, transport and other vital services and infrastructure for all Australians.
EY-Parthenon was engaged by the MCA to estimate royalty and net company tax payments attributable to Australia's minerals sector over the FY16-FY25 period.
The report examines recent fiscal outcomes, including estimates of company tax payments for FY25, and places these in the context of broader movements in commodity prices, production and mining profitability.
Over the past decade, Australia's minerals sector has generated historically high royalty and company tax revenues, particularly during the commodity price surge in the early 2020s.
More recently, fiscal revenues have moderated as commodity prices have eased from peak levels in 2022 and 2023.
Minerals sector company tax provides more than one-third of tax payable by large and international businesses in Australia, contributing 38.5 per cent in FY24.
Mineral royalties are collected by state and territory governments and remain a significant source of fiscal revenue for resource-producing jurisdictions.
The decline in royalty payments primarily reflects lower thermal and metallurgical coal prices following the elevated commodity price conditions observed in recent years, although royalty collections remain well above FY21 levels which can be partly attributed to increases in coal royalty rates in Queensland and NSW.
Movements in company tax payments closely track changes in mining sector profitability. As company tax is levied on profits, fluctuations in commodity prices remain a key driver of changes in tax outcomes across the sector.
Minerals sector company tax payments increased significantly over the past decade, supported by elevated commodity prices and strong mining profitability.
While commodity prices moderated across FY24 and FY25 following the peaks observed in the early 2020s, company tax payments remained well above levels recorded prior to FY21.
The reduction in net company tax payments primarily reflects lower coal and bulk commodity prices, alongside rising operating costs which lowered mining sector profitability.
Despite this moderation, estimated FY25 company tax payments are expected to remain substantially above historical averages, with net company tax payments in FY25 likely to remain more than five times higher than FY16 levels.
