Australia

Details

  • Service: Tax, R&D Incentives
  • Industry: Energy & Natural Resources, Mining
  • Type: Business and industry issue, Regulatory update
  • Date: 24/06/2013

Tax Insights

KPMG's analysis of tax issues and developments.

James Edwards

James Edwards
Director, Tax

+61 8 9263 7216

jedwards1@kpmg.com.au

R&D Tax Incentive – R&D in the mining industry 

by James Edwards, R&D Tax Specialist

The new Research and Development (R&D) Tax Incentive presents both challenges and opportunities for the mining industry. The largest opportunity we are observing to date is for those mid-tier and small cap companies either in the exploration or development phase of their asset lifecycle – many of these companies have a group turnover less than $20 million (in most cases zero), have significant tax losses and are able to access the 45 percent refundable R&D tax offset.

The refund provides much needed cash flow to fund further R&D and asset development, especially important in the current economic climate where access to capital is difficult. In addition, the new incentive scheme does not place a cap on the size of the offset resulting in some significant refunds, in excess of $15 million in some instances.

 

Two of the key challenges for the mining industry with respect the new R&D incentive scheme are concerned with the eligibility criteria and dominant purpose test for supporting activities as well as the new feedstock adjustments. Given the lack of clear guidance material and the complexity of most mining operations, careful consideration is recommended in the application of these provisions.

 

Notwithstanding these challenges, the R&D Tax Incentive is fundamentally strong and provides good benefits to mining companies across the asset life cycle, from exploration through to development, operation and mine closure.

 

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R&D Incentives

KPMG's R&D Incentives professionals can assist organisations to take advantage of the R&D and innovation benefits they are eligible to receive.