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Australian Government Advised On Resource Taxation

Mary Swire,, Hong Kong

24 December 2010

The Australian Government received on December 21 the Policy Transition Group's reports on the implementation of the new resource taxation reforms, and minerals and petroleum exploration.

The Group, jointly led by the Resources and Energy Minister Martin Ferguson and Don Argus, was established to advise on the implementation and technical design elements of the tax reforms, with the aim of minimizing compliance costs and enabling a smooth transition to the new arrangements.

The Group undertook an extensive consultation process with over 80 formal submissions received in response to the consultation paper released on October 1, 2010, and a significant number of face-to-face discussions with industry and other stakeholders.

In a letter from the Policy Transition Group to the Treasurer, they said: “The importance and potential of Australia’s major mineral and petroleum industries are well documented and understood. We believe that our recommendations strike an effective balance between the Government’s policy objective of ensuring that all Australians receive a fair return from the use of our valuable mineral and petroleum resources and providing an efficient, internationally competitive, and sustainable taxation framework that supports continued investment in these important industries. Throughout our deliberations we have sought to base our recommendations on a consistent set of principles, while being mindful of industry submissions, to achieve a balanced outcome.

“We have also been mindful of the need not to impose an undue or unnecessary compliance burden on companies, particularly those small and medium sized companies that are emerging as increasingly important players in the development of new resources, such as magnetite and unconventional gas.

“We believe the proposed MRRT framework will achieve these goals in a manner that is consistent with our terms of reference and the framework established by the Heads of Agreement entered into on 1 July 2010. Similarly, we believe the proposed PRRT changes will provide for a smooth transition for Australia’s onshore oil and gas industries. In several instances, we have provided advice on some changes to the PRRT to improve its administration.

The Government will now consider the recommendations of the report in detail and respond in early 2011 following Cabinet consideration and discussions with state and territory governments. The report will also inform the preparation of exposure draft legislation by mid-2011, which will be subject to further consultation.

”The new resource tax arrangements ensure Australians receive a better return from their non-renewable resources and will underpin major reforms to strengthen our economy through increased superannuation, new and better infrastructure, and business tax cuts. These initiatives are crucial to setting up Australia to maximize the opportunities that will flow from Mining Boom Mark II”, a spokesman said.

TAGS: compliance | tax | investment | business | Australia | oil and gas | legislation | tax reform

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