AMEC slams federal tax concession change

The Association of Mining and Exploration Companies has strongly criticised a federal government decision to abolish the exploration development incentive tax concession, which it warns will have severe consequences in a climate where exploration is already soft.

The concession gives a 30 per cent tax credit for shareholders in mining companies that have losses from exploration spending on their balance sheets.

The government’s decision follows an internal review of the program, which was introduced about three years ago.

AMEC chief executive Simon Bennison said the removal of the incentive was a betrayal of the industry.

“It is turning its back on future mineral discoveries and mining development in Australia,” he said.

The association said it was extremely disappointed at the level of ignorance in government relating to the initiative’s benefits.

“The uninformed and breathtaking policy reversal by government and the Department of Industry is both short sighted and extremely disappointing for the Australian mineral exploration sector, and the nation as a whole,” it said.

Information on the Australian Taxation Office website suggests applicable expenditure under the program was limited to $100 million of greenfields expenditure over a three-year period ending in June 2017.

About $115 million of expenditure was claimed in the first two years of the program, with numbers for this financial year as yet unfinalised.

About $45 million of credits have been issued so far.

The Minerals Council of Australia also took issue with the move.

“(We are) disappointed the government will not extend the Exploration Development Incentive program,” the council said in a press release.

“With Australian minerals exploration expenditure declining by $2.15 billion, or 60 per cent, over the last five years, the government should consider new policy measures to overcome the tax asymmetry whereby junior explorers with no taxable income are unable to access the immediate deduction for exploration.”

Business News has contacted the Treasury to clarify the changes but is yet to receive a formal response.