Resource tax revamp step in right direction

Professional services firm, Deloitte, has welcomed the Federal Government’s revamp of the resource super profits tax (RSPT), now called the minerals resource rent tax (MRRT), and the expansion of the scope of the petroleum resource rent tax (PRRT).

According to mining lead tax partner, Gordon Thring, potential beneficiaries of the changes to the RSPT would now be revisiting their modelling to assess various alternatives for expansion and M&A activity, likely to become more attractive to investors, following the MRRT announcement.

“Iron ore and coal miners will need to ascertain the market value of their mining rights, and their effective life, essential to work out the value of the deductions now available under the new MRRT,” he said.

“Of course, junior miners and explorers, and also those with marginal projects, will no longer benefit from any royalty refunds or underwriting of losses, and will need to re-evaluate their modelling for the coming year.”

Mr Thring said while there is a lot of detail still to be worked out, the new proposal will likely remove the uncertainty for investment decisions and exploration.

“M&A activity should now be more viable, as this move by the Government should alleviate some of the concerns about the longer term impact on investment by overseas interests,” Mr Thring said.

“There are particular groups that will be looking for more clarification, including the onshore oil and gas sector caught under PRRT, which differs significantly to the proposed MRRT.”

Importantly, mining companies not in the coal, iron ore and oil and gas sectors will now effectively be carved out of the new taxing arrangements.