StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

New Resources Tax in AUstralia ( MRRT) and it's effects on Australian mining companies - Essay Example

Cite this document
Summary
The stability of Australia’s annual $A40 billion mining industry, including its globally pioneering technology and workforce, faces risk if the government continues to implement higher tax rates on the industry to subsidise the expansion of other business sectors (Austmine…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER94.6% of users find it useful
New Resources Tax in AUstralia ( MRRT) and its effects on Australian mining companies
Read Text Preview

Extract of sample "New Resources Tax in AUstralia ( MRRT) and it's effects on Australian mining companies"

MRRT Mineral Resource Rent Tax and its Effects on Australian Mining Industries The stability of Australia’s annual $A40 billion mining industry, including its globally pioneering technology and workforce, faces risk if the government continues to implement higher tax rates on the industry to subsidise the expansion of other business sectors (Austmine Board denounces Resource Rent Tax 2010). The introduction of the MRRT or Minerals Resource Rent Tax, which will take effect in 2012 (Taylor 2010) has considerable repercussions on the country’s economy, financial plans, employment and investment in its mining industry and for Australia’s mining states like Western Australia, Queensland, and New South Wales (Senate Select Committee on Fuel and Energy 2010).

The Gillard Government’s proposed resource tax gained high approval from the International Monetary Fund, quoting it as a “step in the right direction.” Moreover, the MRRT would achieve the nation’s trust for consumption-based taxes and abolish ineffective taxation (Landers 2010). Because the MRRT is liable only to mining companies of iron ore, coal, oil and gas, there will be a reduction of the figure of affected companies from the previous 2,500 taxpayers to approximately 320 (Cherrington 2010).

Taxpayers with annual income of no more than $A50 million will be exempted from the MRRT (Minerals Resource Rent Tax Regime n.d.)MRRT’s Possible Impact on Future Investment in Australia’s Mining Industry-The proposed MRRT promises an optimistic stride for mining investments in Australia. It offers a better guarantee for up-and-coming mining ventures, particularly those in the non-production of iron ore, coal, oil and gas.- Negotiations with the three mining giants of Australia, namely the BHP, Rio Tinto andXstrata guarantee that the growth of the postponed projects due to the RSPT or Resource Super Profits Tax of the previous government would push through.

-For companies in mining ventures, the determination of taxable resource and revenues will be based solely on the nearest point to extraction as possible. This change would not deter the companies from their capital cost recovery and internal return rate. -Resulting from all positive changes under the MRRT regime, mining companies would be able to raise funds for upcoming projects.-The key adjustments from RSPT to MRRT in tax rates, particularly the 40% tax reduced to 22.5% rate and the resulting beneficial impacts on the projected efficient tax rates is forecasted to boost global competitiveness (Minerals Resource Rent Tax replaces RSPT 2010).

Unjust Competitive Advantage to Australia’s Mining GiantsThe three pioneer mining companies in Australia: BHP, Rio Tinto and Xstrata equally agreed on a non-permission of the Australian tax to implement a target that could impact their multi-national operations. Their joint apprehensions over fluctuation on international shares and financial markets, whereupon loans are made to fund their projects, strengthened their vigilance on impending tax hikes by the government (Head 2010).The government negotiated exclusively with the three mining firms, granting them an unjust competitive lead over the smaller mining companies.

It should, however, be taken into consideration that the interests of large-scale mining companies are different from the smaller companies’ interests. The government did not act on public interest but on its political interest instead. In so doing, BHP, Rio Tinto and Xstrata were given full accessibility to the government’s internal operation and private information on the MRRT. The three mining giants were likewise granted a direct control over the MRRT blueprint which saddened and disadvantaged the small-scale mining companies.

A total disregard of the government’s duty to provide basic information on tax policies created uncertainties on the future stability of the small companies. This supposedly avoidable failure and negligence by the Gillard Government would eventually lead to a possible reduction of investments in the future (Senate Select Committee on Fuel and Energy 2010). ReferencesAustmine Board denounces Resource Rent Tax (2010), Australian Journal of Mining. Retrieved October 26, 2010 from http://www.theajmonline.com.au/mining_news /news/2010/may/may-06-10/top-stories/austmine-board-denounces-resource- rent-taxCherrington, J. (2010). Goodbye Resource Super Profits Tax, hello Mineral Resource Tax.

Mallesons Stephen Jaques. Retrieved October 26, 2010 from http://www.mallesons.com/publications/2010/Jul/10400570W.htm Head, M. (2010). Australia: Mining magnates ramp up demands on Gillard Government. World Socialist Web Site. Retrieved October 26, 2010 from http://www.wsws.org/articles/2010/jun2010/forr-j30.shtmlLanders, K. (2010). IMF backs resources tax. ABC News. Retrieved October 26, 2010 from http://www.abc.net.au/news/stories/2010/09/30/3025614.htm Minerals Resource Rent Tax Regime (n.d.).

Future Tax. Retrieved October 27, 2010 from http://www.futuretax.gov.au/pages/resourcetax_MRRT.aspxMinerals Resource Rent Tax replaces RSPT (2010). Clayton Utz. Retrieved October 26, 2010 from http://www.claytonutz.com/publications/news/201007/06/minerals _resource_rent_tax_replaces_rspt.pageSenate Select Committee on Fuel and Energy (2010). Parliament of Australia. Retrieved October 26, 2010 from http://www.aph.gov.au/Senate/committee/fuelenergy _ctte/second_interim/b02.htmTaylor, R. (2010).

FACTBOX – Australia’s new resource tax explained. HY Markets. Retrieved October 27, 2010 from http://www1.hymarkets.com/ennews/displayallnews.hyml?methodname=link&_id=1547565

Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“New Resources Tax in AUstralia ( MRRT) and it's effects on Australian Essay”, n.d.)
New Resources Tax in AUstralia ( MRRT) and it's effects on Australian Essay. Retrieved from https://studentshare.org/miscellaneous/1571679-new-resources-tax-in-australia-mrrt-and-its-effects-on-australian-mining-companies
(New Resources Tax in AUstralia ( MRRT) and it'S Effects on Australian Essay)
New Resources Tax in AUstralia ( MRRT) and it'S Effects on Australian Essay. https://studentshare.org/miscellaneous/1571679-new-resources-tax-in-australia-mrrt-and-its-effects-on-australian-mining-companies.
“New Resources Tax in AUstralia ( MRRT) and it'S Effects on Australian Essay”, n.d. https://studentshare.org/miscellaneous/1571679-new-resources-tax-in-australia-mrrt-and-its-effects-on-australian-mining-companies.
  • Cited: 0 times

CHECK THESE SAMPLES OF New Resources Tax in AUstralia ( MRRT) and it's effects on Australian mining companies

Making Business in Bangladesh: Macys

To do this, there is a need for companies to seek help from government agencies and other organizations or groups in their target area so they can learn more about the people who live in the same (Engel).... However, if we were to omit the financial condition of the Bangladeshis and focus instead on the resources of the country, the situation would be different.... Findings In the previous paragraph pointed out that Bangladesh is already engaged in quite a number of business industries and the country is also rich in natural and agricultural resources....
17 Pages (4250 words) Case Study

Australian Latest Mining Boom

In all parts of Australia, mining companies are increasing their present operations, shuttered mines are being re-opened and all this is taking place at a never before pace.... But studies have revealed that some of these increased profits from the mining companies are at the cost of profits from the non mining institutes (Richardson, 2009, p.... Contents Topic Page Number 1) Introduction 3-4 2) Main Body a) Fiscal policy challenges emerging out 4-5 of the recent mining boom in australia b) Resource Rent Taxation and Negative externality 5 c) Economic Framework of Non-Renewable 6 Resource Taxation d) Economic Costs and Benefits of Mining Super 6-8 Profit Tax e) Conclusion 9 f) Recommendations 9 g) Appendix 11 Introduction Mining boom in australia is an outcome of huge demands for these resources in the global market, mainly Asia because of its growing need for these minerals....
10 Pages (2500 words) Essay

Vault Guide to the Top Retail Employers

The case study "Vault Guide to the Top Retail Employers" demonstrates the external business environment.... Organizations do not operate in isolation.... There must be an environment that the organization operates in.... The business organization contains both internal and external factors.... hellip; It is stated that market research upholds ethics because it is focused on the end consumer and the researcher....
10 Pages (2500 words) Case Study

Mineral Resource Rent Tax

The RSPT will ensure equal distribution of profits among all australian mining companies and the government.... The Australian Government decided to provide the resource entities with a refundable credit for the royalties paid by them in the previous years, so that the mining companies receive an extra relaxation on their taxation policies and they are encouraged towards revenue generation.... Introduction The Australian Government accepted the proposal of the Australia's Future Tax System Review to introduce a tax charge on the resource rents and the super profits earned by the mining companies from the exploitation of the non-renewable resources of Australia....
11 Pages (2750 words) Case Study

A Service-Oriented System for Distributed Data Querying: MOTO Company

Both of the companies have a major share of the market.... This can be seemed by the commitment of the tow major manufactures to produce not only cars but to also produce parts, both of which are in excess of what is needed for the australian market.... The author has used vast resources as an international consulting firm.... The new type of car to be offered changes the product entry dynamic.... The new type of car should be seen as entering a new market....
26 Pages (6500 words) Assignment

E-procurement and diffusion of innovation theory and Rogerss model

This essay explores the E-procurement and diffusion of innovation theory and Rogers's model.... Based on the study, a set of plausible recommendations have been framed which can be used by any public organizations to adopt and implement e-Procurement in their business processes.... hellip; The study conducted leads to a general conclusion that incorporation of innovations like e-Procurement is highly critical in ensuring greater efficiencies in the public sector....
45 Pages (11250 words) Thesis

The G7 Industrial Economies Carefully

The open economy consists several countries that include Argentina, australia, Indonesia, Republic of Korea, Mexico, and Saudi Arabia among other countries (G20,2015).... The G7 group was founded in 1975 by finance ministers and Central Bank Governors being part of the economic bloc....
12 Pages (3000 words) Coursework

Australia's Mining Boom

Recently, Australia's mining has witnessed a boom in almost all of its mining companies....  Media reports indicate that the recent growth in australia's economy depends on the country's huge land mass that is rich in mineral deposits.... The current mineral boom in australia can be dated from the year 2005.... This case study "Australia's mining Boom" presents Australia that is ranked as the third-largest producer of metals and minerals in the world....
6 Pages (1500 words) Case Study
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us