• Service: Tax, Global Indirect Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 7/30/2013

Australia - Stamp duty implications of mining investment “farm-in arrangements” 

July 30: Investments in Australian mining projects are often structured so that incoming investors earn an interest in an exploration tenement by funding exploration work—commonly known as a “farm-in arrangement.”

Recent developments illustrate that the duty (tax) implications of farm-in arrangements are not uniform among the Australian states. For example, in July 2013, the Queensland Commissioner issued a revenue ruling to clarify that:

  • No duty is payable on amounts paid for exploration and development of the tenement; however, other consideration will attract duty at rates up to 5.75%.
  • The concession applies to both up-front and deferred farm-in arrangements.

The ruling provides that amounts attributable to mining information will attract stamp duty (tax).

Although some Australian states specifically impose stamp duty (tax) on mining information, the Queensland legislation does not. This is likely to remain an issue of dispute with the Queensland Commissioner.

Read a July 2013 report prepared by the KPMG member firm in Australia: Avoiding adverse duty consequences on farm-in arrangements

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