Key points

  • Stamp duty is now payable in the Northern Territory on acquisitions of 90 per cent or more in listed landholding companies.
  • The proposed amendments in respect of the taxation of employee share schemes and options will most likely commence on 1 July 2009.
  • A new research and development tax credit will replace the existing research and development tax concession from 1 July 2009.  

With the annual round of federal, state and territory budgets now complete, it is worthwhile considering some of the more significant announcements that affect the mining sector.

Northern Territory – landholder duty

Amendments have been made to the Northern Territory stamp duty rules in relation to acquisitions in land holding companies. In particular, stamp duty is now payable on acquisitions of 90 per cent or more in listed landholding companies. At present, Western Australia is the only other jurisdiction to impose stamp duty on takeovers of listed landholder companies.

A company is a ‘landholder’ if it holds more than A$500,000 of land in the Northern Territory (A$2 million in Western Australia). It does not matter where the company is incorporated, where its registered office is or what percentage of the company’s assets consist of land. Land includes mining tenements (including exploration tenements) and fixtures.

Commonwealth – employee share schemes

Among the most highly publicised (and criticised) announcements in the Federal Budget were the announcements in respect of the taxation of employee share schemes and options. The broad consensus was that the announcements would eliminate the effectiveness of most employee share and option plans, including performance rights plans.

The proposed amendments were to take effect in respect of shares and options acquired after 7.30pm on 12 May 2009 and were to have the following effects:

  • the tax deferral mechanism will be abolished such that the discount in respect of shares or options will be assessed upfront (i.e. in the year the share or option is received). It will no longer be possible to defer taxation until the cessation time (which was usually, in respect of options, when the options converted to shares), and
  • access to the A$1000 upfront exemption will be limited to those employees with a taxable income of less than A$60,000.

The response to these amendments was highly critical and, as a result, the Federal Government has backtracked to some extent. A consultation paper and draft legislation have been released under which the Federal Government proposes to:

  • introduce a limited deferral mechanism for some schemes
  • raise the threshold for the A$1000 upfront exemption to a taxable income of A$150,000, and
  • introduce a number of other procedural changes in relation to reporting, valuations and refunds.

It is now anticipated that the measures will commence on 1 July 2009.

Commonwealth – research and development tax credit

In a significant move, the existing research and development tax concession will be replaced with a new research and development tax credit with effect from 1 July 2009.

Under the new measures, in respect of eligible research and development expenditure:

  • businesses with a turnover of more than A$20 million will be able to access a 40 per cent non-refundable credit, and
  • businesses with a turnover of less than A$20 million will be able to access a 45 per cent refundable credit.

The Federal Government is proposing further consultation on exactly how the measures will operate, but has proposed to tighten the requirements on what research and development expenditure will be eligible for the credit.

New South Wales

At the time of publishing the New South Wales Government has also announced a landholder regime for stamp duty purposes with the following relevant elements:

  • A $2 million of land required, and
  • applies to listed takeovers (acquisition of 90 per cent or more).