| What is the rate of RSPT?
|| The RSPT applies at the rate of 40% from 1 July 2012. This tax is deductible in calculating company tax payable.|
|What projects are subject to RSPT?
All Australian projects for the following non-renewable resources:
- Petroleum (including crude oil, condensate, and natural gas, including coal seam gas
- Bulk commodities (black coal and iron ore)
- Base metals (gold, silver, copper, lead, nickel, tin, zinc, bauxite)
- Diamonds and other precious stones
- Mineral sands
Brown coal is to be considered further.
PRRT projects will be eligible to elect into the RSPT regime in lieu of the PRRT regime.
|Will some resources be exempt from RSPT?
||Resources that may merit exemption from the resource rent tax include:|
Clays (bentonite, kaolin, structural and cement clay/shale clay)
Dimension stone (granite, marble, sandstone, slate)
|Potassium minerals and sands|
Sand, gravel and rock
Sillimanate group metals
|How will super profits be calculated?
||Resource Super Profit (by Project)
||Assessable receipts or income (being the market value of the resource at the point of productioni)
||Less Deductible Project Expenditure incurred up to the point of production (including depreciation).
||Less RSPT allowanceii
||Less any prior year project lossesiii
||= RSPT Project Profit or Loss
||+/- losses transferred from/to other projectsiv
||= Resource Super Profits $|
||Tax @ 40%|
|What project expenditure is not deductible?
- Payments of interest and borrowing costs
- Payments of dividends and the costs of issuing shares
- Repayment of equity
- Payments to acquire an interest in an existing exploration permit, retention lease, production licence, pipeline licence or access authority
- Payments to acquire interests in projects subject to the resource rent tax
- Payments of income tax or GST
- Payments of administrative or accounting costs incurred indirectly with the carrying on of the project, and
- Payments in respect of land and buildings not adjacent to the project for use in connection with administrative and accounting activities.v
|Does the RSPT apply to existing projects?
Yes – but it is clear that transitional issues will be difficult including recognising the fair 'value' of project costs for existing projects. This is important as a significant part of the expected growth in the mining industry output is likely to come from the expansion of existing mines.
The RSPT would also apply to projects currently subject to negotiated special royalty arrangements, including those in place for iron ore mines, the Argyle diamond mine in Western Australia and Olympic Dam in South Australia.
Transitional assistance is likely to be provided by recognising a starting 'capital expenditure' base, to recognise investment made at the project level at the commencement of the RSPT. How this is to be calculated is yet to be determined. The starting base for PRRT projects could be set equal to the value of carried-forward expenditure.
|How will the starting project base be available as a deduction in calculating RSPT?
Existing projects will depreciate their RSPT starting base over 5 years at the following accelerated rates:
Year 1 36%
Year 2 24%
Year 3 15%
Year 4 15%
Year 5 10%
|Is RSPT the same as PRRT?
||Resource super profits tax
||Petroleum resources rent tax|
||Most capital expenditure written-off over time
||Capital expenditure is immediately expensed|
||Limited transferability of exploration expenditure|
||Refundability of unutilised expenditure
||No refundability of unutilised expenditure|
||One allowance (uplift) rate for all capital expenditure
||Eight uplift rates for capital expenditure|
|Does a 'super' profit need to be earned for RSPT to be payable?
||The Government's proposed formula does not rely on the project generating any super profit by any commercial standard. |
This is likely to be strongly contested and debated by state governments and the resources industry generally.
|How will this affect shareholder returns?
- RSPT is an additional project cost that is tax deductible
- RSPT does not increase Australian company franking credits
- Shareholder returns are likely to be less unless the tax is recouped through higher commodity prices/sales
|How will RSPT affect long term commodity supply prices?
||There is a risk that commodity prices may increase as a way in part to recover this additional cost.|
|Is this a double tax?
||State and territory royalties will be credited against any RSPT that is payable. |
However future increases in state and territory royalties will not be creditable and therefore may result in potential double tax.
|Will there be further consultation and changes to RSPT?
||The Australian Mining industry does not support the introduction of RSPT. If the RSPT is to be introduced there will need to be extensive state government, community and industry consultation. This is proposed as follows:|
||Announcement and Announcement paper
||Announcement paper released. |
Formation of the Resource Tax Consultation Panel
||Consultations on the fundamental architecture of the RSPT and transitional arrangements for existing projects|
||Extensive consultation and Issues Paper
||Expands on the Announcement Paper setting out further technical design issues. |
Seek submissions from stakeholders.
Opportunity to provide comment on policy design
||Final Design Paper
||Outlines the detailed design of the RSPT. |
Provides certainty to key stakeholders regarding the technical design of the RSPT
||Exposure Draft Legislation
||Seek comments from stakeholders on implementation details and whether legislation is consistent with the|
Final Design Paper
||Legislation introduced into Parliament
||1 July 2012
||Commencement of the RSPT