Australian Government Surrenders on RSPT
Source: mining-technology, David Binning (7/30/10)
"Miners win RSPT battle; government looks to minimize political damage."
Miners also managed to negotiate an increase in the uplift rate to the long-term treasury bond rate (currently at around 5.7%), meaning the tax is triggered at closer to 13% as opposed to 6% under the original proposal.
And the industry got its way, too, with regard to the thorny issue of retrospective pay, and now has the option of choosing between book and market value when calculating tax responsibilities. And as a final sweetener, miners will be able to pocket 25% of their profits as an extraction allowance. Adding everything together, the miners have negotiated an effective tax rate of 22.5%.
Many small- and medium-sized miners have, however, expressed some dissatisfaction at the outcome that was essentially brokered by resources giants BHP, Rio Tinto and Xstrata. They hoped the new tax would include a flow-through share scheme that would enable the transfer of tax deductions of individual small exploration companies to individual investors, which would then be able to claim an income tax deduction. They were disappointed.