Australia

Details

  • Service: Tax
  • Industry: Energy & Natural Resources
  • Type: Press release
  • Date: 2/07/2014

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Exploration Development Incentive to boost mining and minerals sectors 

KPMG hopes a new era in minerals exploration will be kick-started by a $100m initiative, unveiled by the Federal Government today.

Ian Macfarlane, Minister for Industry, gave full details of the new Exploration Development Incentive (EDI) scheme at the Association of Mining and Exploration Companies Inc (AMEC) Convention in Perth, on July 2. Mr Macfarlane’s address was immediately followed by a presentation by Craig Yaxley, KPMG’s WA State Lead Tax Partner, who gave his response to the initiative. 

 

Mr Yaxley said: “One of the key issues to be settled was whether the new scheme applied to all shareholders in qualifying companies or whether it would be restricted to new investors. KPMG welcomes the Minister’s confirmation that companies will be free to choose between the two. We estimate that 100-200 junior exploration companies will apply for the scheme, which will allow them to forego tax deductions not currently being used and instead to allow their shareholders to receive a tax credit for this expenditure”.

 

He added: “KPMG believes that with $100m of tax credits available to investors over three years, the EDI will be an important boost to funding exploration in the mining and minerals sectors, and will help both exploration companies and mining services businesses affected by depressed commodity prices and negative sentiment “.

 

The EDI scheme will provide Australian shareholders in qualifying companies with the opportunity to receive refundable tax offsets where a company invests in “greenfields” mineral exploration in Australia, and the company agrees to relinquish tax losses in a year. Only companies which do not undertake mining activities and do no not have a taxable income in the year are eligible to apply.

 

Mr Yaxley also noted that it was important for draft legislation to be circulated as soon as possible to provide exploration companies and the investor community with a clearer understanding of how the EDI scheme will apply.


The scheme is capped at $100m of tax credits, $25m in 2014/15; $35m in 2015/16 and $40m in 2016/17.

 


 

Media enquiries

Ian Welch

Senior Communications Manager

KPMG in Australia

+61 2 9335 7765, 0400 818891

iwelch@kpmg.com.au