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.