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Resources tax to create more legal work

Resources tax to create more legal work

The proposed new tax on Australia's resources is likely to increase foreign investment in the industry and lead to more work for mining & resources practitioners.Susan O'Rourke, energy &…

The proposed new tax on Australia's resources is likely to increase foreign investment in the industry and lead to more work for mining & resources practitioners.

Susan O'Rourke, energy & resources partner and head of Clayton Utz' China practice, told Lawyers Weekly the most significant feature of the new tax would be the cash rebate, at the prevailing corporate tax rate, for exploration expenditure.

Essentially, this would advantage junior explorers who currently need to wait until they are profitable to get a tax deduction.

"It would assist funding exploration, and if this increases the discoveries and production, more minerals would be available for Chinese and other buyers," said O'Rourke.

"Also, the allocation of part of the taxes collected [would] add to and expand export infrastructure, which would increase export delivery capacity."

As competition for Australia's resources becomes more intense, said O'Rourke, prospective investors must ensure they have well planned strategies to best capitalise on investment opportunities, and foreign companies wishing to invest would need to ensure they secure assets at the right price.

"Australia remains a very attractive destination for inbound investment, particularly in the energy and resources sectors, with China, India, Japan and Korea all competing for the same resources," she said.

"The regulatory environment in Australia is changing, with the Henry Tax Review proposing radical reforms to tax laws that will impact on investment activity in the sector. The Foreign Investment Review Board approval process remains uncertain in many respects and needs to be carefully navigated."

O'Rourke believes Australian lawyers are well-equipped to provide the necessary expertise that foreign investors will be looking for, and she is already fielding enquiries from prospective investors.

"The depth of energy & resources practice around the country, including the key resources centres of Brisbane and Perth, means we are well placed to assist Chinese companies in exploring and pursuing investment opportunities in these sectors," she said.

"We are working with Chinese companies to structure their arrangements around how these new laws would affect them and their consequential strategy. [We] expect new legal work from the proposed changes."

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Resources tax to create more legal work
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