After two months of bitter disputes, the Labor Government has finally succumbed to the miners demands and have this time successfully negotiated a reduced tax regime for natural resources from Australia.
No longer called the Resource Super Profits Tax (RSPT), the new tax will be known as the Minerals Resource Rent Tax (MRRT). Similar to the RSPT, not much in depth announcement was made by the Gillard government.
From what we have gathered, here are some comparisons between RSPT and MRRT:
| RSPT
Resource Super Profits Tax |
MRRT
Minerals Resource Rent Tax |
|
| The 40% tax comes into existence when profits exceeded the 10 year government bond rate (currently just over 5%). | A 30% tax is applied once profits exceed the long-term bond rate plus 7%. | |
| All mining and petroleum companies would have been subject to the tax. | The tax will be now limited to only iron ore and coal companies whose resource profits exceed $50 million per annum. | |
| Onshore and oil projects would have been subject to the tax. | The current petroleum resource rent tax regime will be extended to all onshore oil and gas projects, including coal seam gas, at a 40% tax rate. | |
| Tax was payable on the realised value of resource deposits. | The tax will apply only to the value of the resource, rather than the value added by the miner. | |
| Allowed deductions for the cost of extracting resources and getting them to the taxing point. | Projects will be entitled to a 25% extraction allowance. | |
| State and Territories would keep existing royalties, but the Federal Government would provide companies with refundable credit for current state royalties paid. | Not yet determined |
We will await further details on the specifics of the tax. The Gillard Government is claiming a “win-win” solution, but as yet, they still haven’t spoken to the smaller miners to gather their thoughts.
The opposition has vowed that they will remove the tax if elected in the next election.
Stay tuned.
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