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Australian Mining Exploration Development Incentive Approved — Orbitax Tax News & Alerts

A new Australian mining exploration development incentive has been enacted as part of the Tax and Superannuation Laws Amendment (2014 Measures No. 7) Bill 2014, which received assent on 19 March 2015. The incentive is aimed at fostering the discovery of new resource deposits and encouraging investment in eligible junior exploration companies conducting greenfields mineral exploration.

The incentive allows junior exploration companies to give up part of their losses related to exploration expenditure in an income year in the form of a credit. The credit may be issued to the company's Australian resident shareholders, subject to an annual cap.

A company’s cap for an income year is based on its exploration or prospecting expenditure and tax loss for the previous income year, adjusted by a modulation factor declared by the Commissioner to ensure that the total value of all credits provided in respect of expenditure in an income year does not exceed the cap for a given year. The caps are AUD 25 million for expenditure incurred in 2014-15, AUD 35 million for expenditure incurred in 2015-16 and AUD 40 million for expenditure incurred in 2016-17.

The incentive will not be available for expenditure incurred in income years after 2016-17.