EXPLANATORY STATEMENT
Issued by authority of the Treasurer
Minerals Resource Rent Tax Repeal and Other Measures Act 2014
Proclamation
Item 2 of the table in subsection 2(1) of the Minerals Resource Rent Tax Repeal and Other Measures Act 2014 (the Act) provides that Schedule 1 to 5 to the Act commence on the earlier of a day or days to be fixed by proclamation or the day 12 months after the day the Act received the Royal Assent. The Act received Royal Assent on 5 September 2014.
The Proclamation fixes 30 September 2014 as the day on which Schedules 1 to 5 to the Act commence.
The Act repeals the Minerals Resource Rent Tax (MRRT) and abolishes or amends a number of related tax and spending measures.
Schedule 1 to the Act repeals the MRRT with effect from the date fixed by proclamation – 30 September 2014. It includes transitional rules to ensure that for all taxpayers, the MRRT year ends on this day and to adjust various thresholds and other rules where this would result in a taxpayer having a short final MRRT year.
Schedule 2 to the Act repeals the loss carry‑back measure for income tax. Under the loss carry‑back arrangements in the Income Tax Assessment Act 1997 (ITAA 1997), companies were able to utilise their loss for the current income year to reduce their income in prior years to obtain a refund of the tax they had previously paid in relation to that prior year. The repeal of the loss carry‑back measure has effect from the start of the income year before the income year in which Schedule 2 commences. As this Schedule commences on 30 September 2014, the repeal applies from the start of the 2013-14 income year for taxpayers, other than certain taxpayers with a late balancing substituted accounting period (that is, taxpayers whose income years end after 30 June).
Schedules 3 and 4 to the Act amend the capital allowance concessions for small businesses in the ITAA 1997. As a result of these amendments, the threshold for small businesses to immediately deduct their capital expenditure will be reduced to $1,000 and they will no longer be able to claim concessional deductions for the purchase of motor vehicles. These amendments apply from 1 January of the income year before the income year in which Schedules 3 and 4 commence. As these Schedules commence on 30 September 2014, the amendments apply from 1 January 2014 for taxpayers other than certain taxpayers with a late balancing substituted accounting period.
Schedule 5 to the Act repeals special deductions for expenditure incurred in relation to geothermal energy exploration and prospecting. This repeal has effect from the start of the income year in which Schedule 5 commences. As this Schedule commences on 30 September 2014, the repeal applies from the start of the 2014‑15 income year for taxpayers other than certain taxpayers with a late balancing substituted accounting period.
The start dates give effect to the Government’s intention to abolish the MRRT and related measures as soon as is practicable. They provide taxpayers with certainty about the date of effect of the repeals and amendments and eliminate the effects of the tax.
The Proclamation is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
Overview
The Minerals Resource Rent Tax Repeal and Other Measures Act 2014 was enacted by the Australian Parliament to address the need to repeal the Minerals Resource Rent Tax (MRRT) and related tax and spending measures. This Act, which received Royal Assent on 5 September 2014, was proclaimed to commence on 30 September 2014, ensuring swift implementation of its provisions. The primary objective of the Act, as articulated in the explanatory statement issued by the Treasurer, is to repeal the MRRT and make several amendments to other related tax measures. This legislative action aims to provide certainty to taxpayers regarding the date of effect for the repeals and amendments, thereby eliminating any lingering impacts of the MRRT. The Act also includes transitional rules to manage the end of the MRRT year and adjust various thresholds to avoid creating a short final MRRT year for taxpayers.
Scope and Application
The Minerals Resource Rent Tax Repeal and Other Measures Act 2014 applies to all entities that were subject to the repealed Minerals Resource Rent Tax (MRRT) and related measures. This includes companies and entities involved in the mining and mineral processing industries, as well as those who had previously been subject to the tax. The Act operates within the Commonwealth jurisdiction, impacting all taxpayers under the Australian taxation system. The Act’s scope is comprehensive, covering the repeal of the MRRT and the amendment or abolition of related tax and spending measures, including loss carry-back provisions, capital allowance concessions for small businesses, and special deductions for geothermal energy exploration and prospecting. The repeals and amendments are designed to take effect on 30 September 2014, providing a clear cut-off point for taxpayers to adjust to the changes. The Act does not specify any exclusions or exemptions, meaning that all entities subject to the repealed measures are bound by the new legislation. Any further application or interpretation of the Act may be guided by subordinate instruments, ensuring the provisions are implemented effectively across all relevant sectors.
Key Provisions
The Minerals Resource Rent Tax Repeal and Other Measures Act 2014 (the Act) is structured into five schedules, each with specific commencement dates. Schedule 1 (section 2) repeals the Minerals Resource Rent Tax (MRRT), effective from 30 September 2014. This repeal includes transitional rules to ensure that the MRRT year ends on this date for all taxpayers and adjusts various thresholds to prevent taxpayers from having a short final MRRT year. Schedule 2 (section 3) repeals the loss carry-back measure for income tax, which allowed companies to use losses from the current year to reduce income in prior years for a tax refund. The repeal takes effect from the start of the 2013-14 income year, except for certain taxpayers with a late balancing substituted accounting period. Schedules 3 and 4 (sections 4 and 5) amend capital allowance concessions for small businesses, reducing the immediate deduction threshold for capital expenditure to $1,000 and removing concessional deductions for the purchase of motor vehicles. These amendments apply from 1 January 2014, except for certain taxpayers with a late balancing substituted accounting period. Finally, Schedule 5 (section 6) repeals special deductions for expenditure related to geothermal energy exploration and prospecting, effective from the start of the 2014-15 income year.
The Act imposes specific obligations and requirements on taxpayers and entities affected by the repeals and amendments. For MRRT taxpayers, the Act mandates that the MRRT year ends on the specified commencement date, and requires adjustments to various thresholds to avoid a short final MRRT year. For income tax taxpayers, the Act removes the loss carry-back measure, meaning they can no longer use current year losses to reduce tax paid in prior years. Additionally, small businesses must adhere to the new capital allowance concessions, which include a lower immediate deduction threshold and the exclusion of motor vehicles from concessional deductions. Finally, entities involved in geothermal energy exploration and prospecting must cease to claim special deductions related to this activity, starting from the commencement date of the Act.
The Act includes provisions for offences, penalties, and civil or criminal consequences for breaches. However, the Explanatory Statement does not specify the exact penalties or consequences for non-compliance with the repealed or amended measures. Generally, breaches of tax laws can result in civil penalties, including fines, interest on unpaid tax, and additional assessments. In more severe cases, criminal penalties may apply, such as fines or imprisonment, depending on the nature and extent of the breach. Taxpayers and entities are advised to comply with the Act's requirements to avoid these potential consequences.