A Wild Ride Ahead
a wild ride ahead
The energy and resources industry can expect a wild ride in coming years as the standard-setters turn their attention to this sector.
Story Debbie Smith CA
The energy and resources sector, despite its status as a globally important industry, has received little specific attention over the years from the standard-setters. Recent proposals from the International Accounting Standards Board (IASB), its interpretations committee (IFRIC), and even the Australian Government are making up for lost limelight over the years. The energy and resources sector can expect a wild ride in coming years. In this article we consider five of the financial reporting developments that entities in this sector should have on their radar.
THE MINERAL RESOURCE RENT TAX
What’s new?
The Government has proposed important tax changes that have significant ramifications for the energy and resources sector. Under the former Rudd government these changes included a proposed Resource Super Profits Tax (RSPT) but that has since been scrapped by the new Gillard government and replaced with a proposed new Mineral Resource Rent Tax (MRRT) combined with an extension to the existing Petroleum Resource Rent Tax (PRRT).
What are the key proposals for the sector?
> A new MRRT: The application of the MRRT is limited to iron ore and coal projects in Australia. For the mining industry, the structure of the MRRT generally represents a major positive shift away from the previous RSPT model (proposed under the Rudd government). For example, the headline rate has dropped to 30 per cent and there is an additional 25 per cent extraction allowance (which effectively reduces the headline rate to 22.5 per cent). In addition, the MRRT allowance used to augment carry forward MRRT balances has been set at the longterm bond rate (LTBR) plus 7 per cent and market value can (by choice) be used as the starting base for existing projects. Further, miners with ‘low levels of resource profits’
The energy and resources industry can expect a wild ride in coming years as the standard-setters turn their attention to this sector.
Story Debbie Smith CA
The energy and resources sector, despite its status as a globally important industry, has received little specific attention over the years from the standard-setters. Recent proposals from the International Accounting Standards Board (IASB), its interpretations committee (IFRIC), and even the Australian Government are making up for lost limelight over the years. The energy and resources sector can expect a wild ride in coming years. In this article we consider five of the financial reporting developments that entities in this sector should have on their radar.
THE MINERAL RESOURCE RENT TAX
What’s new?
The Government has proposed important tax changes that have significant ramifications for the energy and resources sector. Under the former Rudd government these changes included a proposed Resource Super Profits Tax (RSPT) but that has since been scrapped by the new Gillard government and replaced with a proposed new Mineral Resource Rent Tax (MRRT) combined with an extension to the existing Petroleum Resource Rent Tax (PRRT).
What are the key proposals for the sector?
> A new MRRT: The application of the MRRT is limited to iron ore and coal projects in Australia. For the mining industry, the structure of the MRRT generally represents a major positive shift away from the previous RSPT model (proposed under the Rudd government). For example, the headline rate has dropped to 30 per cent and there is an additional 25 per cent extraction allowance (which effectively reduces the headline rate to 22.5 per cent). In addition, the MRRT allowance used to augment carry forward MRRT balances has been set at the longterm bond rate (LTBR) plus 7 per cent and market value can (by choice) be used as the starting base for existing projects. Further, miners with ‘low levels of resource profits’