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Mining Tax Grab - How will it pan out?

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Miners call on Gillard to revisit 'deal'
Dennis Shanahan and Andrew Burrell From: The Australian June 30, 2010

http://www.perthnow.com.au/news/miners-call-on-gillard-to-revisit-deal/story-e6frg12c-1225886008746

Mr Forrest said Ms Gillard would need to improve on the key aspects of the negotiations with Mr Rudd to achieve any progress.

"It would be a great shame if the finalised outcome of any negotiations between the Gillard government and the mining industry were anything less than what was achieved while Mr Rudd was PM, otherwise his departure will be recognised as futile," he said.

Oh dear ?
 
electronicmaster said:
Housing already is supper taxed. Excessive stamp duty and CGT.
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CGT?? not on the family home and on almost all (if not all) alternative investments.

Stamp duty. Offset by FHBG, or waivers in the light of builders "doing it tough" (for once)

I would prefer 55% tax on profits made, that would be fair for all.
 
Sounds like a deal in principle has been forged The devil will be in the detail:

Mining tax breakthrough

The Gillard government and Australia's big three miners have made significant progress in talks about a resources tax compromise and are now on the brink of an agreement that would end one of the biggest government-private sector brawls in history.

It's understood that BHP Billiton, Rio Tinto and Xstrata have agreed with the government now on the key elements of a new resources tax structure, including the creation of a new trigger point for the imposition of the tax, set at the 10-year Commonwealth bond yield plus 7 per cent.
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http://www.theage.com.au/business/mining-tax-breakthrough-20100701-zp5z.html
 
I notice that the words "agreement on key elements" were used in the paraphrasing of the announcements. It will be interesting to see the devil in the detail. I am glad it has finally sorted itself out. Twiggy Forrest nowhere to be seen or heard from? Exisiting assets to be taxed at market value makes sense as well.

Three cheers for PM Julia Gillard on getting rid of that wretched previous PM ... good old Whassisname? You know ... that guy who is going to get 600k a year for the rest of his life. Name escapes me already.
 
Im keen to see how any proposed changes will affect the small-mid cap miners. All the talk has been on a deal with BHP, Rio and Fortescue but I hope any deal is in the interests of the whole industry and not just those 3.
 
Where for art thou Whiskers?

Thank The Bull for this one ! http://www.thebull.com.au/articles/a/12493-juniors-could-miss-out-on-rspt-deals.html

Miners in Canada - Australia's main competitor in the global mining market - were delighted the RSPT had given them a free kick as it had increased Australia's sovereign risk, making investment in Canada more attractive.

"They've been quite smart to get rid of Rudd," Mr Young said.

"Julia Gillard is on a bit of a honeymoon, but she was there making the same decisions - this is what frustrates me - she was part of that (RSPT) process.
 
JimBob said:
Im keen to see how any proposed changes will affect the small-mid cap miners. All the talk has been on a deal with BHP, Rio and Fortescue but I hope any deal is in the interests of the whole industry and not just those 3.
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With any tax reform there are always winners and losers to some extent but it's hard to imagine an outcome where threshold, rate or retrospectivity are company specific.
 
Press conference called for 8 30 tomorrow morning. Looks like deal done...for now. A ridiculous article on the ASF sidebar where it was stated that the junior miners could miss out. Tax law, like any law, is bound by our constitutional laws. Laws cannot be used to unfairly discriminate others, which is exactly what would happen if the laws were only to apply to the three bargaining parties.
 
RSPT finalized by this weekend... election called next week - IMO

Surely Gillard has to get this nightmare done and dusted, she definitely doesn't want it hanging over her head.
 
JimBob said:
Im keen to see how any proposed changes will affect the small-mid cap miners. All the talk has been on a deal with BHP, Rio and Fortescue but I hope any deal is in the interests of the whole industry and not just those 3.
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Yes heard a small cap. mining representative on the radio this morning state that they were not even included in the negotiations.

So the changes are:
1. tax rate down to 30%;
2. hurdle rate (on book value) 10-yr bond rate + 700 basis points;
3. 'mark-to-market' for existing assets;
4. only applies to coal and iron ore projects. All oil and gas captured by the existing petroleum tax (including the north-west shelf);
5. Small caps with profits >$50m excluded.
6. exploration tax write-off excluded.

Drop in budget revenue to be made up by company tax rate decreasing only to 29%.

Presumably royalites will still be written-off. There is also an upfront write-off allowed for capex but i will need to see the details to confirm.

Initial thoughts are this is great unless you are a mid-cap iron ore or coal company.
 
Julia Gillard renames mining tax, drops rate as new resources regime announced
From: AAP July 02, 2010 8:35AM

THE Federal Government will limit its new resources tax to just 320 companies mining iron ore, coal, oil and gas.

It has dropped its plan for a resource super profits tax and replaced it with a minerals resource rent tax.

The new tax will apply to iron ore and coal projects which will be taxed at a new headline rate of 30 per cent - down from the previously planned 40 per cent.

The cut-in rate also has been adjusted to the long-term bond rate plus seven per cent.

The current petroleum resource rent tax will be extended to all onshore and offshore oil, gas and coal seam methane projects.
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http://www.heraldsun.com.au/news/br...regime-announced/story-e6frf7ko-1225886959938

Hmmm.

I wonder how that lifting to 40% will impact on all those land-based oil & gas producers? Now they might start kicking up a publicity stink?

If nothing else, such a move would surely push up gas prices in particular for all commercial & home consumers??
 
Bushman said:
Yes heard a small cap. mining representative on the radio this morning state that they were not even included in the negotiations.

So the changes are:
1. tax rate down to 30%;
2. hurdle rate (on book value) 10-yr bond rate + 700 basis points;
3. 'mark-to-market' for existing assets;
4. only applies to coal and iron ore projects. All oil and gas captured by the existing petroleum tax (including the north-west shelf);
5. Small caps with profits >$50m excluded.
6. exploration tax write-off excluded.

Drop in budget revenue to be made up by company tax rate decreasing only to 29%.

Presumably royalites will still be written-off. There is also an upfront write-off allowed for capex but i will need to see the details to confirm.

Initial thoughts are this is great unless you are a mid-cap iron ore or coal company.
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So are mine.


I also heard that small cap. mining representative on the radio this morning state that they were not even included in the negotiations.

Maybe that because they were not going to be affected?????
 
The previous mining tax was set to generate $12 billion in revenue per year from 2011 to 2014. With the tax rate now cut from 40% to 30% (a 25% drop), they are only forecasting a $1.5 billion drop in revenue. Are these figures correct? With the changes, i would have thought revenue would drop by $3 billion or more.
 
Aussiejeff said:
I wonder how that lifting to 40% will impact on all those land-based oil & gas producers? Now they might start kicking up a publicity stink?

If nothing else, such a move would surely push up gas prices in particular for all commercial & home consumers??
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One could safely assume any profit grab will be recouped through higher costs for the consumer.

Can anyone see the industries that will attract investors now? Bit short on foresight this morning but maybe Consumer discretionary/staples, Financials, Telecommunications or Health Care???

Genuine thoughts AussieJ?
 
Jim Bob,

All those figures have always been "pie in the sky" "airy fairy stuff "anyway.
 
JimBob said:
The previous mining tax was set to generate $12 billion in revenue per year from 2011 to 2014. With the tax rate now cut from 40% to 30% (a 25% drop), they are only forecasting a $1.5 billion drop in revenue. Are these figures correct? With the changes, i would have thought revenue would drop by $3 billion or more.
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You need to brush up on your maths Jimbo.

A reduction in a tax rate from 40% to 30% is an effective 10% drop in revenue, not 25%.
 
JimBob said:
The previous mining tax was set to generate $12 billion in revenue per year from 2011 to 2014. With the tax rate now cut from 40% to 30% (a 25% drop), they are only forecasting a $1.5 billion drop in revenue. Are these figures correct? With the changes, i would have thought revenue would drop by $3 billion or more.
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Apparently justified by Swann this morning with "savings" ... no detail yet on WHAT was saved other than the Labor Partys skin on being re-elected.

Will wait for the dossier to come across my floating desk prior to any further comment.
 
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