THE QUEENSLAND Resources Council (QRC) says the immediate implementation of a FTS scheme for Australian junior exploration companies would result in increased exploration expenditure of 10-30%.
The comment follows the release of a co-launched an economic modelling report spearheaded by the QRC and endorsed by nine other resource sector bodies.
Under existing Australian taxation arrangements, junior exploration companies with little or no taxable income are unable to immediately deduct exploration expenses.
The vast majority of junior explorers without an alternative income stream, the absence of immediate tax deductions for exploration simply push costs higher resulting in lower levels of activity and fewer substantive new discoveries and new mining projects. A flow through share scheme does is accommodate the transfer of unusable corporate tax deductions through to a junior company’s Australian shareholders.
Eligible shareholders would then be entitled to use exploration tax credits to offset their tax liabilities thereby maintaining investment momentum, as demonstrated successfully in Canada for more than a decade.
The Canadian Government’s FTS scheme has seen that country elevated to top ranking among global minerals and petroleum exploration companies. The QRC says that an Australian FTS scheme is projected to have same effect.
Chief Executive Michael Roche says Australia has a task ahead of it in reviving its global exploration investment appeal and a FTS scheme for junior exploration companies is a strong launch pad to increase the likelihood of quality mineral, oil and gas discoveries.
Roche claims that the ailing global and domestic economies, coupled with a state government committed to making Queensland the greenfields exploration capital of Australia by 2020 points to this being the ideal time for a FTS scheme to create much-needed new jobs, stimulate new investment and put Queensland in the driver’s seat for the inevitable revival of global minerals and energy demand.
The QRC says that the FTS is capable of generating up to 4,196 new jobs, $114 million in additional gross domestic product, $191 million in additional real private consumption and $965 million in additional real investment between now and 2012-13.
Roche says that while not the subject of this analysis, the substantive longer-term benefits of a FTS scheme include higher mine production.
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