Source: https://www.legislation.gov.au/Details/C2018A00015
Timestamp: 2019-02-19 17:31:20
Document Index: 396179223

Matched Legal Cases: ['art 2', 'art 3', 'art 4', 'art 4', 'art 4', 'art 4', 'arts 1', 'arts 1', 'art 4']

Details: C2018A00015
- C2018A00015
Act No. 15 of 2018 as made
Originating Bill: Treasury Laws Amendment (Junior Minerals Exploration Incentive) Bill 2017
C2018A00015
No. 15, 2018
Schedule 1—Junior minerals exploration incentive 4
Part 2—Other amendments 24
Part 3—Repeal of Division 418 30
Taxation Administration Act 1953 33
Part 4—Application, transitional and saving provisions 35
Division 1—Application and transitional provisions 35
Division 2—Saving provisions relating to repeal of Division 418 36
Schedule 2—Amendment of the Tax and Superannuation Laws Amendment (2014 Measures No. 7) Act 2015 39
Tax and Superannuation Laws Amendment (2014 Measures No. 7) Act 2015 39
This Act is the Treasury Laws Amendment (Junior Minerals Exploration Incentive) Act 2018.
4. Schedule 1, Part 4, Division 1
5. Schedule 1, Part 4, Division 2
Schedule 1—Junior minerals exploration incentive
1 Section 418‑1
Generally, you are entitled to a tax offset for an income year for exploration credits issued to you for the income year.
A greenfields minerals explorer can create exploration credits for an income year. Before creating exploration credits, the explorer must obtain an allocation of exploration credits from the Commissioner for the year.
The exploration credits created for an income year cannot exceed an amount based on the explorer’s greenfields minerals expenditure or tax loss for the year. If the explorer’s exploration credits allocation for the year is smaller than that amount, the amount of exploration credits that the explorer can create will be reduced to sit within the allocation. However, any unused allocation of exploration credits from the preceding year would be carried over and so would increase the amount of exploration credits that the explorer can create.
An exploration credit created by a greenfields minerals explorer can be issued to you if you have invested in the explorer. While the tax offset you receive for the exploration credit issued to you for an income year will apply to that income year, the investment that gives rise to that offset may have been made in that or the preceding income year.
There are rules to ensure that exploration credits are not streamed to some investors rather than others. There are also rules to ensure that the total of the exploration credits you receive because of an investment (whether those credits are issued to you for the year in which you invest or the subsequent year) do not exceed the corporate tax that might be paid by the greenfields minerals explorer on that investment.
The explorer is liable to pay excess exploration credit tax if the explorer issues exploration credits in breach of these rules.
There is a cap on total allocations made by the Commissioner for each income year, but if part of the cap from the preceding year is unallocated it will be carried over. Allocations are made in the order in which applications for an allocation are made.
If an exploration credit is issued to a corporate tax entity, it will give rise to a franking credit (rather than a tax offset).
2 Subdivisions 418‑D and 418‑E
418‑81 Meaning of exploration credits allocation for an income year
418‑82 When does an entity have an unused allocation of exploration credits from an income year
(a) the entity was a *greenfields minerals explorer in the income year; and
(b) the entity has an *exploration credits allocation for the income year or an *unused allocation of exploration credits from the immediately preceding income year.
(2) The entity cannot create *exploration credits for an income year before income tax is assessed for the entity for the year.
(3) The entity cannot create *exploration credits for the 2021‑22 income year or a later income year.
(4) A failure to comply with subsection (1) or (2) does not invalidate the creation of an *exploration credit.
(5) An *exploration credit is to be expressed as an amount.
(6) The entity cannot make more than one decision to create *exploration credits for an income year, and the decision is final and irrevocable.
(b) in relation to which the entity *holds a *mining, quarrying or prospecting right at the time of incurring the expenditure, or is the transferee under a *farm‑in farm‑out arrangement; and
(4) For the purposes of paragraph (3)(c), disregard any mineral resource, identified in a report of a kind referred to in that paragraph, that does not include *minerals the *exploration or prospecting for which involved:
(1) An entity has an exploration credits allocation for an income year if the Commissioner makes a determination under section 418‑101 allocating the entity *exploration credits for the income year.
(2) The amount of the entity’s exploration credits allocation for the income year is the amount of *exploration credits allocated to the entity under the determination.
(3) If no determination is made allocating *exploration credits to the entity for the income year, the amount of the entity’s exploration credits allocation for the year is nil.
(1) An entity has an unused allocation of exploration credits from an income year if each of the following:
(a) the entity’s *exploration credits allocation for the income year;
(b) the total credits issue for investment in the entity for the income year;
exceeds the total amount of all *exploration credits created by the entity for the income year.
(2) The amount of the unused allocation of exploration credits from the income year is the lesser of:
(a) the amount by which the amount mentioned in paragraph (1)(a) exceeds the total amount of all *exploration credits created by the entity for the income year; and
(b) the amount by which the amount mentioned in paragraph (1)(b) exceeds the total amount of all *exploration credits created by the entity for the income year.
(3) If neither the amount mentioned in paragraph (1)(a) nor (1)(b) exceeds the total amount of all *exploration credits created by the entity for the income year, there is no unused allocation of exploration credits from the income year, and the amount of any unused allocation of exploration credits from the income year is nil.
total credits issue for investment in the entity (the minerals explorer) for an income year means the total of all *exploration credits that may be issued by the minerals explorer to all other entities in relation to *exploration investment made by those other entities in the minerals explorer in the income year if section 418‑120 is complied with.
(1) An entity must not create *exploration credits for an income year of a total amount that exceeds the entity’s *maximum exploration credit amount for the income year.
(2) An entity’s maximum exploration credit amount for an income year (the credit year) is the smallest of the following amounts:
(a) the entity’s *greenfields minerals expenditure for the credit year multiplied by the entity’s *corporate tax rate for the credit year;
(b) the entity’s *tax loss for the credit year multiplied by the entity’s corporate tax rate for the credit year;
(i) the entity’s *exploration credits allocation for the credit year; and
(ii) the entity’s *unused allocation of exploration credits from the income year immediately preceding the credit year.
(3) In working out the entity’s *greenfields minerals expenditure for the credit year for the purposes of paragraph (2)(a), reduce that greenfields minerals expenditure by the sum of:
(a) all *recoupments that the entity receives in relation to the entity’s greenfields minerals expenditure for the credit year; and
(ii) all or part of the amount of the deduction to which the entity is entitled under section 40‑25 for the credit year in relation to the decline in value of the asset is included in the entity’s greenfields minerals expenditure for that year;
(4) In working out the entity’s *tax loss for the credit year for the purposes of paragraph (2)(b), reduce that tax loss by the sum of:
(a) all *recoupments that the entity receives in relation to the entity’s *greenfields minerals expenditure for the credit year; and
(b) any part of the entity’s tax loss for the credit year that would not be deductible in the income year immediately following the credit year; and
(5) For the purposes of paragraph (4)(b), assume that the entity’s assessable income for the income year immediately following the credit year is sufficient to allow the entity to utilise the whole of that *tax loss in relation to the credit year.
(1) If an entity creates any *exploration credits for a *loss year, the amount of the entity’s *tax loss for the loss year is reduced by the amount worked out as follows:
Subdivision 418DA—Exploration credits allocation
418‑100 Applying for an exploration credits allocation
418‑101 Determination by the Commissioner
418‑102 General allocation rules
418‑103 Meaning of annual exploration cap
418‑104 Failure to comply with this Subdivision does not affect allocation
(1) An entity may apply to the Commissioner for a determination under section 418‑101 allocating *exploration credits to the entity for an income year.
(2) The application must be made within 1 month before the start of the *financial year corresponding to the income year for which the allocation is sought.
(i) the entity’s *greenfields minerals expenditure for the income year; and
(ii) the entity’s *tax loss for the income year; and
(iii) the entity’s *corporate tax rate for the income year.
(4) The Commissioner must give the entity:
(a) if the Commissioner makes a determination under section 418‑101—a copy of the determination; or
(b) if the Commissioner decides to refuse the application—notice of that decision.
(1) The Commissioner may make a written determination allocating *exploration credits of an amount specified in the determination to an entity for an income year.
Circumstances in which the Commissioner must not make a determination
(2) The Commissioner must not make a determination allocating *exploration credits to an entity for an income year if the Commissioner is not satisfied that:
(b) the entity meets any other requirement prescribed under the regulations.
Amount of the exploration credits allocated
(3) The amount of the *exploration credits specified in the determination must be the smallest of the following amounts:
(a) the entity’s estimated *greenfields minerals expenditure for the income year multiplied by the entity’s estimated *corporate tax rate for the income year;
(b) the entity’s estimated *tax loss for the income year multiplied by the entity’s estimated corporate tax rate for the income year;
(ii) if another amount, or a method for working out another amount, is prescribed—the other amount.
(1) The total amount of *exploration credits allocated to entities for an income year by the Commissioner must not exceed the *annual exploration cap for the year.
(2) The Commissioner must consider applications for *exploration credits from entities for an income year in the order in which the Commissioner receives the applications.
(3) If the Commissioner receives more than one application at the same time, the Commissioner may decide the order in which the Commissioner considers the applications.
(4) If the Commissioner would contravene this section by allocating *exploration credits to an entity for an income year of an amount worked out under subsection 418‑101(3) then, despite that subsection, the amount of exploration credits allocated to that entity for the income year is to be the difference between the *annual exploration cap for the year and the total amount of exploration credits already allocated to other entities for the year.
(1) The annual exploration cap for an income year is the following amount:
(a) for the 2017‑18 income year—$15 million;
(b) for the 2018‑19 income year—$25 million, plus the *exploration credits remainder for the immediately preceding income year;
(c) for the 2019‑20 income year—$30 million, plus the exploration credits remainder for the immediately preceding income year and any other amount prescribed for the purposes of this paragraph;
(d) for the 2020‑21 income year—$30 million, plus the exploration credits remainder for the immediately preceding income year and any other amount prescribed for the purposes of this paragraph.
(2) If the total amount of *exploration credits allocated by the Commissioner for an income year is less than the *annual exploration cap for the year, the difference is the exploration credits remainder for the income year.
A failure by the Commissioner to comply with this Subdivision does not invalidate a determination allocating *exploration credits to an entity for an income year.
418‑111 Working out whether an exploration investment has been made in an income year
418‑115 Who may receive an exploration credit and what is the pool from which the credit may be issued
418‑116 Exploration credits issued must be in proportion to exploration investment
418‑120 The total of all exploration credits issued in relation to exploration investment
(1) An entity that has created *exploration credits for an income year (the minerals explorer) may issue an exploration credit for that income year to another entity (the investor).
(2) The *exploration credit issued to the investor for the income year may relate to:
(a) *exploration investment made by the investor in the minerals explorer in the income year; or
(b) exploration investment made by the investor in the minerals explorer in the immediately preceding income year.
However, this rule is subject to the limitations imposed under sections 418‑115, 418‑116 and 418‑120.
(3) An *exploration credit is issued to an entity by giving the entity a statement in the *approved form.
(1) An entity (the investor) makes an exploration investment in another entity (the minerals explorer) in an income year if:
(a) *shares in the minerals explorer are issued to the investor by the minerals explorer:
(i) on or after the day on which the Commissioner makes a determination under section 418‑101 allocating *exploration credits to the minerals explorer for the income year; and
(ii) before the end of the income year; and
(b) those shares are *equity interests.
(2) The amount of the exploration investment made by the investor in the minerals explorer in the income year is equal to the total amount paid up by the investor on the shares during the period mentioned in paragraph (1)(a).
(1) If *exploration credits are to be issued by an entity (the minerals explorer) for an income year (the credit year), work out each of the following by identifying whether scenario 1, 2 or 3 applies, and applying the rules for that scenario:
(b) whether the minerals explorer can issue an exploration credit to another entity in relation to exploration investment made by the other entity in the minerals explorer in the income year immediately preceding the credit year (the preceding year);
(d) the pool of exploration credits from which an exploration credit may be issued to another entity in relation to exploration investment made by the other entity in the minerals explorer in the preceding year (this is called the issue pool for exploration investment made in the minerals explorer in the preceding year).
Scenario 1—no unused allocation of exploration credits from the preceding year
(2) If there is no *unused allocation of exploration credits from the preceding year:
(3) In this scenario:
(b) the issue pool for exploration investment made in the minerals explorer in the preceding year is nil.
Scenario 2—exploration credits for the credit year exceed unused allocation of exploration credits from the preceding year
(4) If the amount of the *exploration credits created by the minerals explorer for the credit year is more than the *unused allocation of exploration credits from the preceding year:
(5) In this scenario:
(6) However, no *exploration credit can be issued to another entity in relation to *exploration investment made by the entity in the minerals explorer in the credit year unless the *issue pool for exploration investment in the preceding year is exhausted.
Scenario 3—exploration credits for the credit year are equal to or less than the unused allocation of exploration credits from the preceding year
(7) If the amount of the *exploration credits created by the minerals explorer for the credit year is equal to or less than the *unused allocation of exploration credits from the preceding year:
(8) In this scenario:
If an *exploration credit is issued by an entity (the minerals explorer) for an income year to another entity (the investor) in relation to *exploration investment made by the investor in the minerals explorer in an income year (the investment year):
(a) the proportion of the *issue pool for exploration investment made in the minerals explorer in the investment year that is issued to the investor as an exploration credit must be the same as the proportion of the total exploration investment in the minerals explorer in the investment year that is represented by the investor’s exploration investment in the minerals explorer in the investment year; and
(b) the minerals explorer must issue an exploration credit to every entity who made an exploration investment in the minerals explorer in the investment year.
The total amount of all *exploration credits issued by an entity (the minerals explorer) to another entity (the investor) in relation to *exploration investment made by the investor in the minerals explorer in an income year (the investment year) must not exceed the amount worked out using the following formula:
An *exploration credit created by an entity for an income year (the credit year) expires if the entity does not issue the credit under this Subdivision on or before 30 June in the financial year that corresponds to the income year that immediately follows the credit year.
(1) An entity that has created *exploration credits for an income year (the credit year) must notify the Commissioner of the issuing or expiry of the credits.
(i) if the entity is an *investment body for *Part VA investments—for giving to the Commissioner an *annual investment income report in respect of the *financial year corresponding to the year immediately following the credit year; or
(ii) otherwise—for the entity to lodge its *income tax return for the income year that immediately follows the credit year.
3 Section 418‑150
Omit “the entity’s *maximum exploration credit amount for the income year.”, substitute “the amount worked out under section 418‑151 for the income year (the complying exploration credit amount).”.
4 After section 418‑150
418‑151 Complying exploration credit amount
(1) The complying exploration credit amount (which may be nil) for an income year is worked out by:
(a) starting with the sum of the *exploration credits the entity issues for the income year; and
(b) subtracting from the result of paragraph (a) the sum of any of those exploration credits covered by subsection (2); and
(c) if the result of paragraph (b) exceeds the entity’s *maximum exploration credit amount for the income year—subtracting from that result the amount of the excess.
Note: The complying exploration credit amount is the sum of issued exploration credits that were issued (and created) in compliance with this Division. A liability arises under section 418‑150 if the sum of all issued exploration credits exceeds this amount.
(2) This subsection covers an *exploration credit to the extent to which either or both of the following apply to the credit:
(a) the credit was issued in contravention of a requirement in this Division;
(b) the credit was created in contravention of a requirement in Subdivision 418‑D (other than section 418‑85).
Note: Because the maximum exploration credit amount from section 418‑85 is taken into account in paragraph (1)(c) of this section, it is disregarded here.
5 Section 418‑160
An entity that is liable to pay *excess exploration credit tax for an income year (the credit year) must give the Commissioner a return relating to excess exploration credit tax, in the *approved form, within 21 days after the end of the *financial year corresponding to the income year that immediately follows the credit year.
6 Paragraph 418‑185(2)(a)
(a) if, at the time the notice is given, the entity has not issued any *exploration credits for the income year (the credit year) immediately preceding the income year in which the notice is given—the credit year; or
Subdivision 418‑G—Other matters
418‑190 Annual impact assessments of this Division
(a) the 2017‑2018 income year;
(b) the 2018‑2019 income year;
(c) the 2019‑2020 income year;
(d) the 2020‑2021 income year.
7 Subsection 6(1) (definition of exploration development incentive tax offset)
junior minerals exploration incentive tax offset means a tax offset under Subdivision 418‑B of the Income Tax Assessment Act 1997.
9 Subparagraph 177F(1)(e)(i)
Omit “an exploration development incentive”, substitute “a junior minerals exploration incentive”.
10 Subparagraphs 177F(3)(e)(i) and (ii)
Omit “an exploration development incentive” (wherever occurring), substitute “a junior minerals exploration incentive”.
11 Section 13‑1 (table item headed “exploration for minerals”)
Omit “exploration development incentive”, substitute “junior minerals exploration incentive”.
12 Section 67‑23 (table item 27)
13 After section 112‑77
112‑78 Exploration investments
An exploration investment in the form of a share is disposed of
The total reduced cost base
130‑110
14 Section 130‑1
· exchangeable interests.
· exchangeable interests; and
· exploration investments.
15 At the end of Division 130
Subdivision 130‑F—Exploration investments
130‑110 Reducing the reduced cost base before disposal
(a) an entity (the minerals explorer) issues a *share in the minerals explorer to another entity (the investor) during the 2017‑18, 2018‑19, 2019‑20 or 2020‑21 income year; and
(b) the Commissioner makes a determination under section 418‑101 allocating exploration credits to the minerals explorer for the income year in which the share is issued; and
(c) the share is issued to the investor on or after the day on which the Commissioner’s determination is made; and
(d) the share is an *equity interest.
(2) The *reduced cost base of the *share is to be reduced immediately before the disposal of the share by the amount worked out as follows:
investment period means the period, within the income year in which the *share is issued to the investor, that:
(a) begins on the day on which the Commissioner makes the determination mentioned in paragraph (1)(b); and
(b) ends at the end of the income year.
16 Subdivision 418‑B (heading)
Subdivision 418‑B—Junior minerals exploration incentive tax offset
17 Group heading before section 418‑10
18 Group heading before section 418‑25
19 Subdivision 418‑C (heading)
Subdivision 418‑C—Junior minerals exploration incentive franking credit
20 Section 418‑50 (heading)
418‑50 Junior minerals exploration incentive franking credit—ordinary case
21 Section 418‑55 (heading)
418‑55 Junior minerals exploration incentive franking credit—life insurance company
annual exploration cap for an income year has the meaning given by subsection 418‑103(1).
23 Subsection 995‑1(1) (definition of exploration credit)
After “created”, insert “, or to be created”.
exploration credits allocation for an entity for an income year has the meaning given by section 418‑81.
exploration credits remainder for an income year has the meaning given by subsection 418‑103(2).
exploration investment has the meaning given by section 418‑111.
issue pool, for exploration investment made in an entity in an income year, has the meaning given by section 418‑115.
25 Subsection 995‑1(1) (definition of maximum exploration credit amount)
maximum exploration credit amount for an income year has the meaning given by subsection 418‑85(2).
26 Subsection 995‑1(1)
unused allocation of exploration credits from an income year has the meaning given by section 418‑82.
(1) This section applies if the Commissioner makes a determination under section 418‑101 of the Income Tax Assessment Act 1997 allocating exploration credits to an entity for an income year.
27 Section 45‑340 in Schedule 1 (method statement, step 1, paragraph (h))
28 Section 45‑375 in Schedule 1 (method statement, step 1, paragraph (g))
29 Subsection 6(1)
(b) definition of junior minerals exploration incentive tax offset.
30 Paragraphs 177C(1)(bba) and (fa)
31 Subparagraph 177C(2A)(b)(ii)
32 Paragraph 177C(2A)(c)
33 Subsection 177C(3)
34 Paragraph 177C(3)(caa)
35 Paragraph 177C(3)(cb)
36 Paragraph 177C(3)(ga)
37 Paragraphs 177C(3)(h) and 177CB(1)(da)
38 Paragraph 177F(1)(da)
Omit “taxpayer; or”, substitute “taxpayer;”.
39 Paragraph 177F(1)(e)
40 Paragraph 177F(3)(da)
41 Paragraphs 177F(3)(e) and (f)
42 Section 13‑1 (table item headed “exploration for minerals”)
43 Section 36‑25 (table dealing with tax losses of greenfields minerals explorers)
44 Section 67‑23 (table item 27)
45 Section 130‑110
(a) an entity (the minerals explorer) issued a *share in the minerals explorer to another entity (the investor) during the 2017‑18, 2018‑19, 2019‑20 or 2020‑21 income year; and
(b) the Commissioner made a determination under section 418‑101, as in force immediately before 1 July 2023, allocating exploration credits to the minerals explorer for the income year in which the share was issued; and
(c) the share was issued to the entity on or after the day on which the Commissioner’s determination was made; and
investment period means the period, within the income year in which the *share was issued to the investor, that:
(a) begins on the day on which the Commissioner made the determination mentioned in paragraph (1)(b); and
exploration credit has the meaning that it had under this Act, as in force immediately before 1 July 2023.
46 Section 197‑42
47 Subsection 205‑15(1) (table item 7)
48 Subsection 219‑15(2) (table item 8)
49 Division 418
50 Subsection 995‑1(1)
(a) definition of annual exploration cap;
(b) definition of annual investment income report;
(c) definition of excess exploration credit tax;
(d) definition of exploration credit;
(e) definition of exploration credits allocation;
(f) definition of exploration credits remainder;
(g) definition of exploration investment;
(h) definition of greenfields minerals expenditure;
(i) definition of greenfields minerals explorer;
(j) definition of issue pool;
(k) definition of maximum exploration credit amount.
51 Subsection 995‑1(1) (paragraph (a) of the definition of tax loss)
52 Subsection 995‑1(1) (definition of unused allocation of exploration credits)
53 Subsection 8AAB(4) (table item 16A)
54 Section 45‑340 in Schedule 1 (method statement, step 1, paragraph (ga))
Omit “companies); or”, substitute “companies).”.
55 Section 45‑340 in Schedule 1 (method statement, step 1, paragraph (h))
56 Section 45‑375 in Schedule 1 (method statement, step 1, paragraph (fa))
57 Section 45‑375 in Schedule 1 (method statement, step 1, paragraph (g))
58 Paragraph 155‑5(2)(g) in Schedule 1
59 Subsection 155‑15(1) in Schedule 1 (table item 4)
60 Subsection 250‑10(2) in Schedule 1 (table item 38D)
61 Section 280‑101 in Schedule 1
62 Paragraph 280‑105(1)(a) in Schedule 1
63 Subsection 280‑110(1) in Schedule 1
64 Subsection 284‑80(1) in Schedule 1 (table item 5)
Part 4—Application, transitional and saving provisions
Division 1—Application and transitional provisions
(a) the creation and issuing of exploration credits by an entity in relation to exploration investment made in the entity in the 2017‑18, 2018‑19, 2019‑20 and 2020‑21 income years, but not in relation to exploration investment made in the entity in later income years; and
(b) the consequences of creating or issuing exploration credits for the 2017‑18, 2018‑19, 2019‑20 and 2020‑21income years.
66 Transitional provisions relating to the 2017‑18 income year
(1) Despite subsection 418‑100(2) of the Income Tax Assessment Act 1997, as inserted by item 2 of this Schedule, an application to the Commissioner for a determination allocating exploration credits to an entity for the 2017‑18 income year must be made during the period of one month starting on the later of:
(2) Nothing in subitem (1) affects the rules in subsection 418‑102(2) or (3) of the Income Tax Assessment Act 1997, as inserted by item 2 of this Schedule.
(a) there can be no allocation of exploration credits for the 2016‑17 income year by the Commissioner under section 418‑101 of the Income Tax Assessment Act 1997, as inserted by item 2 of this Schedule; and
(b) there can be no unused allocation of exploration credits from the 2016‑17 income year for the purposes of that Act, as amended by this Schedule.
67 Continued application of the old law in relation to entities that were greenfields minerals explorers in the 2016‑17 income year
To avoid doubt, the taxation law continues to apply in relation to the 2017‑18 income year as if the amendments in Parts 1 and 2 of this Schedule had not been made, to the extent that the law relates to:
(a) the creation and issuing of exploration credits on the basis that the entity that creates and issues the credits is a greenfields minerals explorer in the 2016‑17 income year; and
Division 2—Saving provisions relating to repeal of Division 418
Schedule 2—Amendment of the Tax and Superannuation Laws Amendment (2014 Measures No. 7) Act 2015
1 Subsection 2(1) (table item 12)
However, the provisions do not commence at all if Parts 1 and 2 of Schedule 1 to the Treasury Laws Amendment (Junior Minerals Exploration Incentive) Act 2018 commence before 1 July 2020.
2 Subsection 2(1) (table item 14)
12. Schedule 6, Part 4, Division 2
House of Representatives on 19 October 2017
Senate on 15 February 2018]