subject: Learn All About The New Minerals Resource Rent Tax [print this page] The minerals resource rent tax is now applicable nation wide in Australia. The government is exploring and developing reference material to help individuals and tax payers. The new and already existing iron ore projects in Australia will be liable to pay MRRT. This tax is applied on a project interest basis. All coal miners who have secured licenses for extraction of iron ore in Australian mines will come under this category.
Please read below some basic features of this tax:
1.This tax applies on the valuation point, which separates the upstream and downstream operations. The tax will be levied on the value of extracted ores only, and not on the processing activities undertaken by the extractor.
2.The basic tax will be 30% which will further be reduced by 25% as an extraction allowance. The tax will then be reduced to 22.5%.
3.Operating and capital expenses incurred from 1 July 2012 are subject to deduction but the unused losses may be carried forward.
4.The taxpayer can also apply for pre-mining project losses to the mining project interest.
5.MRRT will offer a full credit for Commonwealth, State and Territory royalties paid by a taxpayer for a mining project by way of royalty allowances.
6.MRRT will recognise past investments through an allowance, known as the starting base, which can be either:
a.the market value of past investment, written down over a period of up to 25 years, or
b.the book value of past investment written down over a five year period.
However, smaller miners may get some concession on this tax depending on the circumstances. Coal or iron miners whos collective profit is less than $75 million for the year can opt for the simpler MRRT method. This method will reduce their liability, however, this may also deprive them from benefits of certain future MRRT allowances. To provide services in accounting for MRRT, various accounting firms are exploring the subject.
