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2013-2014
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
THE SENATE
MINING SUBSIDIES LEGISLATION AMENDMENT (RAISING
REVENUE) BILL 2014
EXPLANATORY MEMORANDUM
(Circulated by the authority of Senator Christine Milne)
Mining Subsidies Legislation Amendment (Raising Revenue) Bill
2014
GENERAL OUTLINE: Policy Rationale
This Bill seeks to remove a distortion in the tax system that favours some industries
over others by abolishing the following fossil fuel subsidies for mining companies
from 1 January 2015:
1. The diesel fuel rebate for the mining industry - since the carbon price repeal,
mining companies no longer pay a cent in tax for their fuel, compared to
ordinary Australians who pay 38 cents litre;
2. Accelerated asset depreciation for aircraft, the oil and gas industry and
vehicles - instead of the usual practice of depreciating assets such as cars,
planes and machinery over their useful life, the mining industry is allowed to
claim depreciation over a shorter period;
3. Immediate deduction for exploration and prospecting expenses for the mining
industry - expenditure on exploration and prospecting by the mining industry
is immediately deductible for company tax rather than depreciated over time
as is the usual practice for investments.
The impact will be limited to resource companies only. The equivalent tax
concessions available for agricultural businesses will not be affected.
NOTES ON CLAUSES
Clause 1 - Short title
This clause provides for the Bill, when enacted, to be cited as the Mining Subsidies
Legislation Amendment (Raising Revenue) Act 2014.
Clause 2 - Commencement
This clause provides for the Act to commence on the day after it receives the Royal
Assent.
Clause 3 - Schedule(s)
This clause specifies that each Schedule in this Act, that is amended or repealed,
operates according to its terms.
Schedule 1 - Amendments
Fuel Tax Act 2006
Item 1
This item removes the ability for mining and quarrying operations to claim fuel tax
credits under subsection 41-5(1).
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Income Tax Assessment Act 1997
Item 2
This item provides that the immediate deduction for exploration or prospecting assets
under subsection 40-80(1) does not apply to assets first used on or after 1 January
2015.
Items 3 and 5
The table in subsection 40-102(4), set out below, provides for special effective lives
for various aircraft, vehicles and vessels.
Capped life of certain depreciating assets
Item Kind of depreciating asset Period
1 Aeroplane used predominantly for agricultural 8 years
spraying or agricultural dusting
2 Aeroplane to which item 1 does not apply 10 years
3 Helicopter used predominantly for mustering, 8 years
agricultural spraying or agricultural dusting
4 Helicopter to which item 3 does not apply 10 years
5 Bus with a * gross vehicle mass of more than 3.5 7.5 years
tonnes
6 Light commercial vehicle with a * gross vehicle 7.5 years
mass of 3.5 tonnes or less and designed to carry
a load of 1 tonne or more
7 Minibus with a * gross vehicle mass of 3.5 7.5 years
tonnes or less and designed to carry 9 or more
passengers
8 Trailer with a * gross vehicle mass of more than 10 years
4.5 tonnes
9 Truck with a * gross vehicle mass of more than 7.5 years
3.5 tonnes (other than a truck that is used in *
mining and quarrying operations and that is not
of a kind that can be registered to be driven on a
public road in the place in which the truck is
operated)
10 Vessel for which you have a certificate under 10 years
Part 2 of the Shipping Reform (Tax Incentives)
Act 2012
Items 3 and 5 of the Bill provide that items 2, 4 and 5-9 of the table do not apply to
aircraft and vehicles used for mining and quarrying operations, if the relevant time for
the assets occurs on or after 1 January 2015.
Items 4 and 5
Subsection 40-102(5) provides for special effective lives for assets used in particular
industries.
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Items 4 and 5 end this special treatment in relation to assets for use in the oil and gas
extraction industry, if the relevant time for the assets occurs on or after 1 January
2015.
Item 6
This item provides that the company tax deduction under subsection 40-730(1) for
expenditure on exploration or prospecting does not apply to expenditure incurred on
or after 1 January 2015.
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny)
Act 2011
Mining Subsidies Legislation Amendment (Raising Revenue) Bill 2014
This Bill is compatible with the human rights and freedoms recognised or declared in
the international instruments listed in section 3 of the Human Rights (Parliamentary
Scrutiny) Act 2011.
Overview of the Bill:
The purpose of this Bill is to remove a distortion in the tax system that favours some
industries over others by abolishing the following fossil fuel subsidies for the mining
industry from 1 January 2015:
1. the diesel fuel rebate;
2. accelerated asset depreciation for aircraft, the oil and gas industry and
vehicles;
3. immediate deduction for exploration and prospecting expenses for the mining
industry.
Human Rights Implications:
This Bill does not engage any of the applicable rights or freedoms.
Conclusion:
This Bill is compatible with human rights as it does not raise any human rights issues.
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