21/05/2019 - 15:27

Strike joins Northern Minerals as R&D tax losers

21/05/2019 - 15:27

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ASX-listed Strike Energy will not receive its federal government research and development tax credits for the 2018 financial year, a week after West Perth-based Northern Minerals was ordered to pay back 50 per cent of its $21.56 million R&D rebate for the same financial year.

Strike joins Northern Minerals as R&D tax losers
Northern Minerals says it was utilising the funds to develop its $56 million Browns Range pilot plant.

ASX-listed Strike Energy will not receive its federal government research and development tax credits for the 2018 financial year, a week after West Perth-based Northern Minerals was ordered to pay back 50 per cent of its $21.56 million R&D rebate for the same financial year.

In a statement, Strike said AusIndustry’s review confirmed its original decision to deny the R&D pre-registration and withhold payment of R&D tax credits.

The company has until June 17 to appeal the decision via the Administrative Appeals Tribunal, which the board has not yet made a decision on, but will not have to pay back any tax credits.

Managing director Stuart Nicholls said Strike was extremely disappointed with the decision, despite the research that has been conducted at its Jaws project in South Australia’s Cooper Basin.

"The government must support companies who are attempting to innovate the nation's way through the burgeoning east coast energy crisis and this decision to withhold R&D credits is counter to the rhetoric of the government with relation to trying to find a solution for the rising cost of energy," he said.

Strike has several assets in Western Australia, most notably the West Erregulla project in the Perth Basin, for which it is the operator.

West Erregulla is on track to be the first project drilled for oil in the Perth Basin in over two years. 

Last Friday, rare earths hopeful Northern Minerals said its R&D activities for the 2017 and 2018 financial years would be declared ineligible, after a review of its income tax returns by the federal government.

In addition to the $10.78 million it will have to pay back for the 2018 financial year, it said it would have to pay back around $2.6 million for the financial year prior.

It will have 28 days to appeal the decision.

The company said it was utilising the funds to develop its $56 million Browns Range pilot plant in the east Kimberley.

“The company is continuing to consider funding options so as to meet any amount that becomes payable to the ATO and also to continue with its continued development of Browns Range,” it said.

In the 2018 federal budget, the then-Treasurer Scott Morrison announced significant changes to R&D tax rebate system.

At the time, Mr Morrison said the changes would prevent rorting and save the economy $2 billion a year.

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