Relevant to the resource sector in particular are potential changes to the thin capitalisation, accelerated depreciation, exploration and fuel tax credit provisions.
Multinational resource companies operating in (or from) Australia would be impacted by a tightening of the thin capitalisation regime and may need to consider existing funding structures as well as how to fund investments going forward.
Speculation of cuts to diesel fuel tax credits for the mining industry specifically and removing statutory caps on the effective life of depreciable assets used in the oil and gas industry would also result in increases to the already high costs faced by the sector.
The treatment of exploration expenditure has also been an area of focus for the ATO and taxpayers alike in recent times, and is an area that resource taxpayers will continue to monitor closely.
An additional factor for taxpayers to consider is that with only four sitting weeks after the Budget release until the Federal election and an already crowded parliamentary agenda, tax reforms announced in the federal budget may be difficult to implement before the election.
With the above in mind, resource companies should consider the impact of these potential changes on the economics of projects, while being mindful that there may be a change in government before any changes can actually be legislated.