Minerals Resource Rent Tax

Australia's Mineral Resource Rent Tax (MRRT) on iron ore and coal projects commences on 1 July 2012. The MRRT was passed by the Australian Parliament on 19 March 2012. This Tax Brief summarises the main provisions of the enacted legislation.

Summary

The key elements of the MRRT are:

1. The tax applies to iron ore and coal projects in Australia.
2. An effective tax rate of 22.5% applies to mining profits.
3. The tax is confined to net profits on upstream mining operations and does not seek to tax the value added in downstream activities.
4. The tax only applies to realised profits, which typically arise on the sale or export of the resources.
5. A liability to pay mining tax will generally arise for projects in the production stage. Exploration expenditure can potentially be recognised to offset revenue once production commences.