Mining tax detail emerges
Friday, 10 June 2011 — The release today of the Mineral Resource Rent Tax (MRRT) draft legislation provides the first real glimpse of how the tax will be calculated when it is proposed to apply from 1 July next year.
EY tax partner Andrew Nelson says there is significant detail yet to be debated and finalised in the legislation.
“Miners need to examine the detail in this draft legislation and work out how prescriptive it is, what has not been dealt with, and what elements are clearly still open to modification,” says Nelson.
“However, while there will inevitably be modifications, there are things that are now time sensitive that miners need to act on. Those that have taken the ostrich head in the sand approach now have to act – 1 July 2012 is close when needing to implement a totally new tax regime.”
Nelson says there are many points that the legislation will need to close out as part of presenting a final package, however there is now a framework for miners to focus on their key issues.
“Miners that have existing projects, or are contemplating new projects, or are looking at M&A deals each face very different and material issues of uncertainty under the proposed MRRT.”
“For example, the law introduces the central concept of a ‘mining project interest’. Miners need to understand the scope of such an interest and understand the impact of combining, splitting, acquiring or exiting such interests.”
“In this regard the devil really is in the detail and miners need to quickly and carefully examine the draft, understand the impact to them and raise issues as part of the ongoing legislative refinement process.”
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