• Service: Tax, Topics, Tax Reform, Resource Taxation, Federal Budget
  • Industry: Energy & Natural Resources, Forestry, Mining, Oil & Gas
  • Type: Business and industry issue
  • Date: 19/04/2013

Tax Insights

KPMG's analysis of tax issues and developments.

Kurt Burrows

Kurt Burrows
Partner, Corporate Tax

+61 8 9263 7420

How the upcoming budget could impact the resource sector 

by Kurt Burrows, Corporate Tax Specialist

With the Federal Budget to be released on 14 May 2013 – and anticipation of a budget deficit – it is timely to consider how the Government may look to boost revenues.

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.


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