The Critical Minerals Production Tax Incentive: draft guidance on the proposed application of the community benefit principles

The Future Made in Australia (Production Tax Credits and Other Measures) Act 2025 (Act), which received Royal Assent shortly before the May 2025 Federal election was announced, established the critical minerals production tax incentive (CMPTI).  The CMPTI provides a 10% tax offset on eligible Australian processing expenditure for critical minerals processed and refined from 1 July 2027 to 30 June 2040.

At the time of its passage through Parliament, concerns were raised about various aspects of the CMPTI (and the hydrogen production tax incentive that was also established by the Act).  The major area of uncertainty and concern regarding the CMPTI was the application of the community benefit principles (CBPs) rules in respect of the CMPTI (Rules).  We have set out how the CBPs work here, and concerns with the CBPs here and here. 

The Senate Economics Legislation Committee (Committee) noted the requirement for further consultation on the Rules. 

The Department of Industry, Science and Resources has released for consultation draft public guidance on how the CBPs are to be applied to Future Made in Australia supports (Draft Guidance).  Roundtable consultation sessions in respect of the Draft Guidance took place in January. 

Relevantly, the Draft Guidance contains a separate part outlining relevant processes underpinning the implementation of the CBPs to the CMPTI.  

In this insight we delve into the Draft Guidance as it relates to the application of the CBPs to the CMPTI. 

Draft Guidance as it relates to the application of the CBPs to the CMPTI

Overview

As mentioned, the proposed application of the CBPs to Future Made in Australia production tax incentives (such as the CMPTI) is separate to the application of Future Made in Australia supports and is set out in Part 4 of the Draft Guidance.  The specific requirements, as they apply to these incentives, will be detailed by rules set by the Minister under the Act. 

Approach 

For a company to receive the full amount of the CMPTI it seeks to claim, it is proposed that the company must:

• publish a Production Tax Incentive Community Benefit Report (Report) detailing how the project will provide community benefits. The Report should outline information in accordance with the rules made by the Minister under the Act. The required CBPs information that is proposed is set out in Appendix E of the Draft Guidance.
  
  Despite the necessary differences in application, it is proposed that the information required in the Report broadly align with the proposed information required to satisfy the minimum and the threshold requirements for Future Made in Australia supports and the reporting and publication requirements for Future Made in Australia plans set out in Appendices A to C.  Some of the proposed information is binary, while other information is prescriptive.
  
  The reporting (content) and publication requirements for the Reports are outlined in Appendix F.  The content requirements are proposed to differ for the first year a company intends to claim the CMPTI, and subsequent years.  Companies must publish (on a publicly available website) the Report prior to lodgement of the tax return for the income year in which the CMPTI would be claimed, and maintain public access to the Report(s) through the ten year period of the CMPTI.
  
  Companies will also be required to have their Report reviewed by a Registered Company Auditor to provide assurance that any factual information reported is true and correct.

• comply annually with additional tax compliance and transparency requirements – specifically, adopting the Voluntary Tax Transparency Code (VTTC) and demonstrating engagement with the tax system by meeting requirements consistent with criteria for a satisfactory Statement of Tax Record (STR) (e.g. being up to date with registration and lodgement requirements, and not having undisputed debt of $10,000 or more). Compliance with these additional requirements will be assessed by the Australian Taxation Office. These requirements are set out in Appendix E.

Tax legislation contains objective liability criteria through which an entity can self-assess its liability to pay tax, or eligibility for a particular offset, and calculate particular amounts of tax and offsets. A tax liability or benefit cannot follow a subjective determination by a decision-maker following the consideration of certain criteria. This means the application of the CBPs for the Report needs to apply generally. The publication of a Report will be sufficient to meet the CBPs requirements for the CMPTI, other than adopting the VTTC and demonstrating engagement in the tax system by meeting criteria consistent with a satisfactory STR.

The Draft Guidance also sets out the proposed reductions in the amount of the CMPTI where a Report is non-compliant (for example, because publication of the Report is late or it does not address each of the CBPs).