Question:
Mining tax legislation now before Parliament
Answer:
Recent changes are outlined below:
July 1, 2022
- Loss carry back for eligible companies extended to cover 2023 income year.
- Professional firm profits diverted to the professional's spouse or other associates to be reviewed under new Tax Office guidance.
- Corporate collective investment vehicle legislative regime introduced.
- Temporary full expensing of depreciating assets extended to include 2023 income year.
- Depreciable assets of a company joining a tax consolidation group have tax costs setting rules modified for assets depreciated under temporary full expensing rules.
December 9, 2021
- Reduced Pandemic leave disaster payment of $750 per week made available through to 30 June 2022.
August 5, 2021
- COVID-19 Disaster Payments are non-assessable non-exempt income in 2021 income year and later. Payments phasing out as vaccination rates increase.
July 1, 2021
- New Investment Engagement Service launched for businesses planning significant new investments in Australia.
- Tax Office small business independent review service made permanent for businesses with turnover < $10m, for income tax, GST, exercise, luxury car tax, wine equalisation tax and fuel tax credits. Requested before amended assessment issued.
- Small business income tax offset for individuals increased to provide a reduction of 16% for a tax payable up to $1,000.
- Self-managed superannuation funds can now have six members, increased from four members previously.
July 1, 2021
- Some COVID -19 state and territory business grants received by small and medium enterprises are non-assessable, non-exempt income for 2021 and 2022 income years.
- Certain state, territory and local government financial support for individuals and businesses suffering COVID-19 impacts made exempt where businesses have turnover less than $50 million and only in eligible programs.
March 31, 2021
- JobKeeper payments scheme ended.
October 5, 2020
- Boosting apprenticeship commencements subsidy (up to 50% of apprentice's wages) is assessable income.
June 4, 2020
- Homebuilder grant for new home or substantial renovation construction is not subject to income tax.
April 1, 2020
- COVID-19 cash flow boost payments are not subject to income tax
More trees have been cut down and the paperwork burden substantially increased with the introduction of the mining tax legislation. The full name is the Minerals Resource Rent Tax (MRRT) and comprises five Bills which were introduced into the House of Representatives on 2 November.
The bills are titled as follows:
- Minerals Resource Rent Tax Bill 2011;
- Minerals Resource Rent Tax (Consequential Amendments and Transitional Provisions) Bill 2011;
- Minerals Resource Rent Tax Bill (Imposition – Customs (Bill 2011);
- Minerals Resource Rent Tax Bill (Imposition – Excise) 2011; and
- Minerals Resource Rent Tax Bill (Imposition – General) 2011.
The Bills are currently being examined by the House of Representatives Standing Committee on Economics and the expectation is that they will be passed by the house this year and be voted on by the Senate in February 2012.
The independent members of the House of Representatives have however indicated that they will each be pressing for changes to the Bills with one member demanding a $400 million subsidy for study of land and water catchments and the effect of coal seam gas extraction.
If this legislation passes through Parliament in its present form, the result will be a brand new tax levied on major mining companies. Details include:
- The MRRT will be a percentage of profits from iron or coal extracted and of profits from gas extracted as a necessary incident of coal mining together with gas produced by the in situ combustion of coal;
- The tax liability will be calculated separately for each project being pursued by the mining company;
- The company’s liability will be the aggregate of the liabilities for each project;
- The rate of tax will be 30% less a 25% extraction allowance. Accordingly, it will be 22.5% of the mining profit less allowances;
- The mining profits will be calculated by taking all mining revenue and deducting mining expenditure;
- A full credit will be allowed for all royalties paid to State or Territory Governments;
- The net profit is calculated at what is defined as the valuation point, which is the point in the mining production chain that separates upstream from downstream operations;
- However, at that point the sale proceeds will be reduced by the arms length value of downstream operations. Directly deductible will be all upstream capital and operating expenses, royalty credits, carry forward losses, depreciation and losses transferred from other projects;
- Losses and credits unable to be used can be transferred to other projects or carried forward to later years; and
- If total mining profit is less than $50 million in a year, the tax will be reduced to nil. There will be a phasing in arrangement if profits are between $50-$100 million.
The valuation point will normally be the point where the mineral is transferred from the run-of-mine (ROM) stock pile (where the mineral is stored after extraction). If there is no ROM stock pile or it is by-passed, the valuation point will be prior to the first beneficiation. Mining companies will also be able to claim an allowance (starting base allowance) in respect of projects on foot as at 1 May 2010. This allowance can be based on the market value or book value of the project upstream assets.
The MRRT will apply from 1 July 2012.
WTB 1745
