How the Resource Super Profits Tax will operate

The Resource Super Profits Tax (RSPT) will be charged at a rate of 40% of assessable resource profits (assessable revenue less deductible expenses including an allowance for capital expenditure) in accordance with the review recommendation.

Assessable receipts

The RSPT will assess receipts from the sale of the resources. The RSPT will exclude receipts from the transfer of ownership in the resource project among shareholders. Assets leaving a project will be subject to a balancing adjustment.

Deductible expenditure

In general, the RSPT will allow deductions for the cost of extracting resources and getting them to the taxing point. However, the RSPT will not allow deductions for the following types of expenditure:

• payments of interest and financing costs, including the cost of issuing shares, the repayment of equity, the payment of dividends, and financial hedging costs
• payments to acquire an interest in an existing exploration permit, retention lease, development licence, production licence, pipeline licence or access authority
• payments to acquire interests in projects subject to the RSPT, and
• payments of income tax or GST.

Who will be liable for RSPT?

According to the Government, the RSPT will apply to all legal entities (companies, partnerships and trusts) directly involved in the exploitation of Australia's non‐renewable resources with the exception of projects already covered by the Petroleum Resource Rent Tax (PRRT).

What resources will be subject to the RSPT?

According to the Government, the RSPT will apply to all mining and petroleum projects, with the exception of PRRT projects, for which opt‐in arrangements will be developed in consultation with industry. Projects currently subject to the PRRT will have the option of transferring into the new RSPT. However, an election into the new tax will be irrevocable.

What is the interaction with income tax?

RSPT payments will be deductible for income tax purposes. This is consistent with the current income tax arrangements for state royalties, crude oil excise, resource rent royalty and PRRT. Conversely, RSPT refunds will be assessable for income tax purposes.

The Government will provide a refundable credit to resource entities for state royalties paid to State governments following commencement of the RSPT. The objective of the credit is to reduce the impact of state royalties and negate concerns that the resource profits tax is a ‘double' tax.

The new resource exploration rate

Government will also introduce a new resource exploration rebate, within the company income tax system. Under the resource exploration rebate, companies can receive a refundable tax offset at the prevailing company tax rate for their exploration expenditure. The rebate will apply to the same range of exploration expenses currently immediately deductible under the tax law, provided the exploration is undertaken in Australia.