The Henry Tax Review and the Government’s response were released on 2 May 2010. In the Government’s response, four key areas have been targeted for medium term action: the resources sector, superannuation, the company tax rate and small business capital allowances. In summary, the key measures in respect of the mining sector are as follows:
Resource Super Profits Tax
- A Resource Super Profits Tax (RSPT) will be introduced from 1 July 2012, at a rate of 40% on profits from the exploitation of Australian resources.
- The regime will be similar, although different to the PRRT regime currently applying to most offshore petroleum projects.
- In effect, the state royalty regimes, although not abolished, will be subsumed by the RSPT – this will be achieved through a mechanism allowing a refund of state royalties.
- The RSPT will apply to both new and existing projects. For existing projects, transitional rules will apply.
- The Government proposes to conduct consultations on the measure this year with a final design paper due out late in 2010, and exposure draft legislation circulated after further consultation by mid-2011.
Resources Exploration Rebate
- A refundable Resources Exploration Rebate will be introduced for resources exploration expenditure, including expenditure on exploration for geothermal energy, incurred on or after 1 July 2011. It will take the form of a company income tax offset.
Superannuation
- The superannuation guarantee rate is to be raised in stages from 9% to 12% by 2019–20. The first increase will be 0.25% starting 1 July 2013.
- The superannuation guarantee age limit will be raised from 70 to 75, starting 1 July 2013.
Company tax rate
- A phased reduction in the company income tax rate from the current 30% to 28% in the 2014–15 income year (29% in the 2013–14 income year).
- This is dependent on introduction of the RSPT.
Freehills will shortly be hosting a number of seminars to consider the full effect of these proposed reforms on the Australian mining industry.
This article was written by Nick Heggart, Partner, Perth.
More information
For information regarding possible implications for your business, contact