07 May 2010

The Henry Tax Review - The resource super profits tax's impact on the Energy & Resources sector

The Federal Government's proposed Resource Super Profits Tax has attracted a lot of attention, but what does it actually involve? How will it operate? And how attractive will it make Australia as a target for investment - or M&A?

In our special Henry Tax Review analysis, our Tax and Energy and Resources teams explore aspects of the proposed Resource Super Profits Tax.

At a glance

  • The Resource Super Profits Tax is a separate tax on profits of a company from Australian resource projects and will be levied at 40%. It is deductible in calculating the company's income tax liability, but won't generate franking credits as it is not an income tax.
  • We think this will reduce Australia's attractiveness for investment in the mining sector, but might lead to more M&A activity.
  • Given the concerns the current proposals are generating, we would expect the Federal Government to modify the Resource Super Profits Tax regime.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.