The Australian Federal Treasurer Joe Hockey has introduced legislation to repeal the Minerals Resource Rent Tax (MRRT).
This is likely to put an end to the controversial tax, which had earlier survived a constitutional challenge in the High Court in August 2013.
The MRRT was first introduced by the former Federal Government back on 1 July 2012 for the purpose of generating increased revenue from companies that extract coal or iron ore in Australia by imposing a 30% tax on the “super profits” (profits above $75 million) of such producers. The MRRT could also affect corporations that are entitled to a share in a taxable resource from a mining venture or obtain an interest in an exploration permit or retention lease.
Since the MRRT was enacted, despite predictions that it would raise revenue of up to $3.7 billion per year, it has only raised a net $400 million. Mining companies have also complained that the MRRT has had a negative impact on investment in mining projects. The MRRT also imposed significant compliance costs on the mining sector.
On 24 October 2013, the new coalition government announced its plan to repeal the MRRT, with effect from 1 July 2014 by releasing a draft of the Minerals Resource Rent Tax Repeal and Other Measures Bill 2013. The government believes that repealing the mining tax will boost the mining sector’s outlook and spark a fresh round of investment in the country’s resources projects. In addition, if as expected the Bill is passed, the Treasurer has predicted that the repeal could save the budget $13.4 billion.
The legislation to repeal the MRRT will also seek to repeal other measures that were associated with the MRRT, such as the “schoolkids bonus”.
Companies who are unsure of their obligations in the lead up to the repeal of the MRRT should seek legal advice.