Tax plea knock-back
Thursday, 24th January, 2013
By Kurtis J Eichler
The Federal Government has brushed aside calls to introduce a Flow Through Scheme (FTS), saying it already provides "generous" tax benefits for mineral exploration companies.
Carpentaria Explorations executive chairman, Nick Sheard, last week called on the Government to introduce the system to give junior mining companies more of a chance to find investment.
The tax system rewards investors who buy into up-and-coming mining companies by giving them a tax refund on their shares.
A spokesman for the Assistant Treasurer, David Bradbury, said exploration companies were already given enough help.
"The Australian tax system already provides generous tax treatment for exploration, in particular, the immediate tax deductibility of exploration expenses," the spokesman said.
The Canadian scheme was considered in detail almost three years ago by the Resource Taxation Policy Transition Group (PTG), chaired by Minister for Resources, Martin Ferguson.
Mr Ferguson and former PM Kevin Rudd went into the 2007 federal election with the promise to investigate the tax.
But the PTG felt at the time there wasn't a compelling case for extra incentives, particularly in the climate of high commodity prices.
"Information on the effectiveness and net benefit to the taxpayer of schemes such as the Canadian flow through shares scheme is dated, sparse and at times contradictory," the spokesman said.
However, Mr Sheard argues the system could work well here, and prove prosperous for not just junior Australian explorers but those in Broken Hill.
"It took a lot of time to catch on in Canada but exploration dollars went up dramatically," he said.
Investors were taking being tighter with their money as troubles in the US and Europe and the Global Financial Crisis linger on, he said.
He said this was making it harder for start-up exploration companies to raise the money needed to get digging.
"If they had a FTS, the investors would be more likely to put cash in.
"It would be an incentive in my view."
Professor Ian Plimer, a director of a number of mining companies here and abroad, criticised the government's comments on the tax scheme.
"These are comments from an anti-mining government," Prof Plimer told the BDT yesterday.
"People are investing in places like Africa because they are perceived as being more secure than Australia and that's a great indictment on the government."
Prof. Plimer praised the scheme, saying as soon as it was rolled out in Canada, exploration took off.
"As a result, they found a new mine and created new employment.
"It's one of the many things I've lobbied on in terms of the mining industry and also spoken to the opposition about."