Expenditure on mining rights and information will no longer qualify for an immediate deduction. Instead mining rights and information first used for exploration will be depreciated over 15 years, or their effective lives, whichever is shorter. The effective life of a mining right and associated exploration information will be the life of the mine to which it leads. If the exploration is unsuccessful, any remaining undepreciated value will be immediately deductible.
However notwithstanding these proposed measures the following expenditure will continue to be immediately deductible:
- The costs of mining rights from a relevant government issuing authority.
- The costs of mining information from a relevant government authority.
- The costs incurred by a taxpayer itself in generating new information or improving existing information.
- The mining rights acquired by a farmer under a recognised “farmin, farm-out” arrangement (these are often used by small explorers and do not represent a base erosion concern).