Happy Tuesday!
Have you ever wanted to see how much big companies actually earn? If you have, this is the newsletter for you. I’m going to unpack the tax returns for Australia’s biggest companies.
But first, the Reserve Bank released its Financial Stability Review last week, let’s see what it’s saying about the economy.
Your questions, answered
Question: What is the RBA financial stability review?
Every six months, the Reserve Bank (RBA) publishes a Financial Stability Review, which provides its assessment of how things are going in the financial system.
The whole financial industry is about connecting people who have money with people who want money — simply put, savers and borrowers.
Savers, like households or superannuation funds, want to save or invest their money and maybe make some interest by lending their money
Borrowers, like homebuyers, businesses, or the Government, want to borrow money to buy a house or build a factory.
The financial system is the set of companies and regulators that match these two sides. They decide who can borrow money, how much they can borrow, and how much interest they will need to pay.
When the economy is stable, it means borrowers have enough income to pay back the savers the amount they were loaned, plus the agreed interest. Financial instability is the opposite. It means borrowers are having trouble paying off their loans.
The RBA looks at two main things:
How stable is the system right now? Are homeowners paying off their mortgages? Are businesses paying off their loans?
How prepared is the system for a big shock? If interest rates went up, or China stopped importing our iron ore, how would that affect our ability to pay off our loans?
TL;DR: The system is looking pretty good.
Households are in good shape, which we know because the share of people defaulting on their mortgage is low.
Have a look at the RBA’s chart below. It tells us that if you added up all the money borrowed by Australian home owners, fewer repayments are running late.
Source: RBA
The other interesting thing the RBA noted is that lots of borrowing to buy houses has been done by real estate investors, rather than home owners.
The RBA suggested that lots of borrowing by investors could cause some risk in the system, and they would support the banking regulator (Australian Prudential Regulatory Authority, or APRA) in addressing this possible risk.
Have a look at this chart. See on the right hand side how the line jumps up? This tells us that most of the borrowing (i.e. housing credit growth) has come from investors, not owner-occupiers.
Source: RBA
More broadly:
The share of businesses going bankrupt is up in some sectors, but not a major problem across the whole economy.
There are a few risks from other countries, notably China’s changing economy.
Remember: Financial stability means that people have enough money to pay back their loans, and the system is prepared for a shock to that ability.
Right now, people look like they are paying back their loans on time, and the risks are small and manageable. Therefore, we are financially stable at the moment.
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The week’s biggest finance headline, explained
The 2025 corporate tax transparency report
Last week, the Australian Taxation Office (ATO) released the 2025 corporate tax transparency report.
Before getting stuck into the data, let’s outline some key concepts.
Every year, the ATO produces a corporate tax transparency report. It includes all companies in Australia which earn more than $100 million, and tells us their total income and how much tax they paid.
The standard corporate tax rate is 30%.
However, companies never actually pay 30% of their total income.
Why? Two reasons:
Companies have to pay 30% on their taxable income, not their total income. Taxable income is total income minus the cost of running a business and other deductions. If the cost of running your business is higher than your total income (i.e. you’re losing money), you pay no corporate tax.
Some companies may be entitled to additional tax credits that mean they pay less than 30% of their taxable income. Examples include research and development tax credits, and foreign income tax credits.
This chart shows the top 10 companies who had the most tax payable in the 2023-24 financial year. The bars show how much they have to pay in corporate tax in billions.
Source: ATO
Australia’s biggest corporate taxpayers are banks and mining and resource companies. Of the top 10 taxpayers, six are mining companies, three are banks, and one is an oil and gas company (Chevron Australia).
The highest ranking non-bank, non-mining, non-oil company is Wesfarmers, coming in at 17th. Wesfarmers owns lots of retail brands like Bunnings and Officeworks. It paid just under $1 billion in corporate tax.
This graph shows some of the top 10 companies who paid no tax. The bars show their total revenue in billions.
Source: ATO
None of this income counted as taxable. There are several reasons why:
Big energy companies and telcos spend lots of their revenue on investing in new power plants or grid connections, and these investments are tax deductible (e.g. AGL, Energy, Ichthys, NBN).
Foreign companies can deduct tax paid abroad (Singapore Telecom, Tal Dai-Ichi Life).
Big companies sometimes create smaller sub-companies to compartmentalise parts of the business, and these sub-companies face most of the tax deductible expenses (e.g. Chevron Australia Downstream).
The report covered about 4,000 companies, and about 28% did not pay any tax. That’s the first time that number has been lower than 30%.
Interestingly, the fact that this number is low does not necessarily mean the ATO is collecting more corporate tax than ever. In fact, the amount of corporate tax collected by the Government fell by $2.2 billion. It is perfectly possible for the number of big tax-payers to increase while the total tax collected goes down.
A titbit for your group chat
A few signs you’re in your late 20s include: physical injuries that don’t magically heal on their own anymore, getting hungover from fewer drinks, and talking about house prices.
I speak from experience. If you’re like me and are finding yourself talking about house prices as much as you used to talk about your high school crushes, here’s some new housing data to sink your teeth into. September 2025 saw the fastest monthly increase in house prices in nearly two years. Darwin is leading the pack, with 1.7% growth in prices in September, and 5.9% increase over the past three months. Hobart is dragging the chain - prices have increased only 0.1% in the last three months.
TDA asks
