Boost for explorers expected as tax credit plan goes to parliament
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The Australian government’s proposed new exploration tax credit has been introduced to parliament for debate and the odds are it will get through, according to mining industry representatives.
Debate on the bill was expected to begin on Tuesday night.
“The bill will implement [Prime Minister Malcolm Turnbull’s] commitment that $100 million of direct tax offsets will become available over four years,” said Warren Pearce, the newly installed boss of Association of Mining and Exploration Companies (AMEC).
The new Junior Mineral Exploration Tax Credit, or JMETC, will allow exploration companies with no mining income to renounce and pass on future tax deductions to Australian resident investors.
“As there is bi-partisan support we anticipate that the Amendment Bill will pass through the House of Representatives and the Senate very quickly,” Mr Pearce said.
The JMETC is a modified version of the previously failed Exploration Development Incentive, which the government binned in May last year following a review that showed a 36 per cent drop in registered participants from the first year to the second year.
But the move angered junior explorers and the government agreed to work with industry to find a better alternative.
“The JMEI is a critical investment in Australia’s future, particularly as recent research in relation to existing mines indicates that there will be significant reductions in production and government revenue streams as these mines reach the end of their current lives,” Mr Pearce said.
“They need to be replenished by successful new discoveries as soon as possible.”
In the September quarter last year, greenfield exploration expenditure lifted by 16.9 per cent to $23 million and brownfield exploration expenditure rose 2.4 per cent to $7.4 million.
Greenfield refers to the exploration of new ground where a discovery has not yet been made, while brownfield refers to near-mine exploration undertaken to expand production at an existing operation.
Although exploration expenditure is picking up, there is still an imbalance between greenfield and brownfield, with 67 per cent of exploration undertaken in a brownfield setting.