"Resource Boom Mark II is well underway and we’ll see a peak of this project expenditure in 2013-14 with nearly $90 billion worth of expenditure. Whilst this will convert into income tax depreciation deductions and deductible expenditure for the PRRT and MRRT, which reduces tax liabilities, over the long term the flow of tax revenues from these projects can be expected to be very large. There is no denying that the resources sector will be a major contributor to government revenues," said Rod Henderson, KPMG National Tax Partner for Energy and Natural Resources.
The government will adopt all the recommendations of the Policy Transition Group (PTG) in respect of the Minerals Resource Rent Tax (MRRT) regime, and the extension of the Petroleum Resource Rent Tax (PRRT) regime to onshore projects, which will commence from 1 July 2012.
In the forward estimates the government is projecting receipts from resource rent taxes, including PRRT and the proposed MRRT to deliver revenues of $8.1 billion in 2012-13, $8.9 billion in 2013-14 and $7.3 billion in 2014-15 compared to receipts of $1.2 billion in 2009-10 under the current PRRT which only applies to certain offshore projects. "This is dependent on the successful passage of the MRRT and extended PRRT proposals into law to meet the commencement date of 1 July 2012," said Mr Henderson.
For corporate income tax, the budget papers show that due to the above increased tax depreciation, a lower proportion of company tax will be collected from the mining sector in the short term, but overall the company tax collections will grow significantly as the economy continues to grow at a healthy rate on the back of the ongoing resource boom.
"The government predicts the growth of the economy will continue unabated for some time based on the growing middle classes of China, India and other Asian developing countries. For example, total company tax collections (across all industries) in 2014-15 are projected to be $82 billion compared to company tax in 2010 of $52 billion…..that’s growth of 57 percent over five years or nearly 10 percent year-on-year," said Mr Henderson.
Overall there is a positive story as the increased resources activity drives economic prosperity and ultimately provides a long term source of revenues to fund government services and programs.