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In a move likely to be welcomed by the mining and resources industry, the Shadow Minister for Energy and Resources, Ian Macfarlane, yesterday announced the Coalition’s commitment to introduce an Exploration Development Incentive benefiting exploration companies.
In his media release, the Shadow Minister confirms 'The Coalition will introduce an Exploration Development Incentive that will allow investors to deduct the expense of mining exploration against their taxable income, starting on 1 July 2014' and 'Our scheme will target small exploration companies by limiting eligibility to companies with no taxable income and will be capped at $100 million over the forward estimates'.
While the introduction of such a scheme has previously been Australian Labor Party policy at the 2007 election, this was never implemented. While the industry may be cautious, the commitment to a firm start date of 1 July 2014 and the announcement of a specific budget cost for the measure is significant.
If introduced, the cap of $100 million limits the cost of the measure. Interested exploration companies should consider undertaking their fund raising and exploration activities from an earlier date following the Scheme’s commencement given the limited budget allocation.
Following a Coalition election win this Saturday, further details would be expected to be released as to the operation of the Scheme. In this regard, the Shadow Minister proposes that 'the Australian Taxation Office will determine a proportion of expenses that can be claimed as tax credits by investors’.
At our upcoming focus session on exploration farm-ins, we will seek to address this announcement and any further details released in the event the Coalition wins the election. Please click here for registration and session details if you wish to attend on 19 September 2013.
This alert covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. The alert is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.