Not only that, it strikes at Australia’s investment competitiveness. The EDI helped bring Australia into line with jurisdictions such as Canada, which have the benefit of a flow-through share scheme. When it comes to regions with similar prospectivity, investment is going to go to the one that offers better incentives.
First launched in 2014, the three year EDI scheme allocated A$100 million for eligible explorers to create exploration credits that could be distributed to equity shareholders by giving up a portion of their tax losses from greenfield spending.
These credits entitled shareholders to a refundable tax offset or additional franking credits, while reducing carry-forward losses for the company.
The credit was capped at $25 million in 2014-15 – against $70.3 million in notified exploration expenditure, while the 2015-16 cap of $35 million was closer to the $45.7 million in notified spending.
AMEC CEO Simon Bennison said the decision not to renew the incentive was based on limited measurable data, as well as being conducted during a severe exploration downturn.
“The Government`s decision to dump the Exploration Development Incentive is a betrayal of the mineral exploration industry in Australia,” he said.
“The uninformed and breathtaking policy reversal by government and the Department of Industry is both short sighted and extremely disappointing for the Australian mineral exploration sector, and the nation as a whole.
“Economic growth and jobs are at stake for future generations of Australians for what is a small and sensible investment.”
Minerals Council of Australia CEO Brendan Pearson said he was “disappointed” the EDI was not being extended.
“With Australian minerals exploration expenditure declining by $2.15 billion, or 60%, over the past five years, the government should consider new policy measures to overcome the tax asymmetry whereby junior explorers with no taxable income are unable to access the immediate deduction for exploration,” he said.
However, despite this, Pearson labelled the budget a “balanced document”, praising its focus on infrastructure and the establishment of a regional growth fund.
“It will be important for these infrastructure investments to be guided by sound economic analysis to ensure taxpayer resources are invested in projects which will benefit future generations,” he said.
