The exposure draft bills include:
The MRRT Bill includes numerous amendments to the initial draft legislation as well as new and significant supporting provisions which had previously been flagged.
The Consequential Amendments Bill is particularly interesting in its integration of the mining tax within Australia’s existing tax regimes.
Our previous alerts which consider the development of the mining tax are available here and here.
The ‘mining tax’ has had a contentious history. The complete package of legislation that is now available raises even more issues for debate and discussion. In particular the new MRRT Bill and the Consequential Amendments Bill impose some highly onerous and complex obligations on miners.
The Australian mining industry will now be preparing further submissions on the two draft bills. It is also important that financiers, suppliers and other industries engaged with miners also carefully consider the impacts of the mining tax on their operations.
Treasury was provided with 28 submissions on the first draft of the MRRT Bill which outlined a range of concerns. A number of these concerns have been acted on and miners may welcome some of these amendments.
The amendments adopted by Treasury include:
At this stage it appears that a significant number of the amendments requested to the mining tax have been rejected. These include:
It is possible that a number of these issues will be raised again with Treasury in the current consultation period.
The second draft MRRT Bill also contains additional provisions (referred to as the specialist liability rules), which were flagged in the first exposure draft. These rules have not previously been available for consultation. The new provisions deal with a range of matters including, inter alia:
The amendment and anti-avoidance rules may be considered particularly stringent having regard to the overall complexity of the regime.
In addition to this the Consequential Amendments Bill sets out new provisions for the existing Tax Acts. The new provisions deal with the administration and collection of the mining tax with provisions providing for PAYG instalment tax payments, the provision of returns and the maintenance of records.
Miners who are consolidated for tax purposes are also to have the election to consolidate for the purposes of the mining tax. In that case the members of the tax consolidated ‘mining’ group will be subject to the joint and several tax liability regime.
The consolidation of MRRT liabilities and the transfer of a ‘mining interest’ between entities will introduce a range of issues for M&A and project financing activity.
The public have been given a limited time frame to respond to the second exposure draft of the MRRT Bill and the draft Consequential Amendments Bill. Submissions on the Bills are due by Wednesday, 5 October.
A number of the issues raised in relation the first exposure draft of the MRRT Bill are likely to be repeated and emphasized by industry. The significant compliance burden and uncertainties introduced by the revised exposure draft is also likely to be highlighted.
The Government appears determined to introduce the legislation as soon as possible and ensure the tax is in operation for 1 July 2012. Miners and all entities which transact with miners should continue to monitor the development of the tax and plan for its commencement. Miners which are subject to the legislation will need to establish sophisticated administrative systems to ensure their compliance with the new rules.
Miners of iron ore and coal in Australia, businesses which engage and transact with those miners, including financiers to mining projects.
Monitor the progress of the Minerals Resources Rent Tax and consider the changes and impacts to your business.