[miningmx.com] — AUSTRALIA’S government released draft legislation for its controversial mining profits tax on Friday, keeping the 30% rate and said resource firms would be able to push for changes before bills were brought to parliament later this year.
The government unveiled its initial plans for the mining tax over a year ago but has extensively modified its original proposal after global miners including BHP Billiton, Rio Tinto, and Xstrata launched a campaign against it.
The mining tax is due to take effect on July 1, 2012, and the Treasury earlier said it expected A$7.7bn in revenue in its first two years, which should help the budget return to surplus in 2012/13.
“These reforms will ensure Australians receive a better return from their non-renewable resources and will help strengthen our economy through increased superannuation, new and better infrastructure, and business tax cuts,” Treasurer Wayne Swan said in a statement.
Resource sector opposition over the tax and a A$20m advertising campaign against it ahead of national elections led in great part to the ousting of former prime minister Kevin Rudd and a minority government for Rudd’s successor Julia Gillard.
Private consultations with miners over the past few months helped iron out differences over the tax, which applies only to coal and iron ore, but some key sticking points remain before the bills go to parliament after a second drafting round.
The biggest open issue now involved the valuation of multiple tenements within an area, as their classification as a single or multiple projects will influence tax levels and the value of projects that can be shielded from the tax.
The tax point for underground coal mines is also a sticking point, as the government resisting concessions after Western Australia (WA) state raised royalties, threatening a A$2bn national budget hole.
The legislation excludes small miners with assessable profits of under A$50m a year and allows mining projects to access immediate write offs on new investments. The tax will carry forward unutilised losses at the government long term bond rate plus 7 percent.
The draft said the legislation would account for different commodities by using appropriate pricing arrangements to ensure only the value of the resources extracted was taxed.
Resource Minister Martin Ferguson last month promised the national government would reimburse miners for future state royalties, in exchange for mining tax acceptance, after WA said it would lift gradually lift royalties on iron ore fines by 2014 to 7.5 % from 5.625%, raising A$2bn.
But BHP and AngloCoal are arguing that mine sites straddling multiple exploration or production permits should be treated as a single project, helping them claim tax breaks.
BHP said in a statement it was committed to working with the government to implement the tax as agreed.
The government, based on advice from an advisory group on the tax, wants each tenement or lease within a mining site to be valued individually, creating bureaucratic hurdles for companies and possibly the tax burden.