- Refundable tax offsets for greenfield explorers
Treasury Laws Amendment (Junior Minerals Exploration Incentive) Bill 2017, which replaces the previous Exploration Development Incentive (‘EDI’) scheme with the new Junior Minerals Exploration Incentive (‘JMEI’) has now passed through Parliament. The JMEI scheme is effective from 1 July 2017 with the first year of operation being in respect of the year ended 30 June 2018.
Eligible greenfield explorers who participate in the JMEI scheme will be eligible to distribute their tax losses as a refundable tax offset to investors who purchased newly issued shares in eligible greenfields exploration companies – unlike the previous EDI scheme which was applied to all shareholders.
The JMEI scheme operates from 1 July 2017 and applications in respect of the year ended 30 June 2018 open on 16 April 2018. While applications are open until 15 May 2018, the JMEI scheme operates on a first in first served basis and as a result, explorers wishing to participate for 2018, will need to ensure their JMEI registration application has been completed and is ready to lodge on open of applications by the ATO on Monday 16 April 2018. Given the first in first served selection criteria, we recommend lodgement of JMEI applications with the ATO by 12:01am AEST on 16 April 2018 to provide the best chance of being provided with an allocation of JMEI credits for distribution to its shareholders in FY19.
To complete their 2018 JMEI registration application, eligible explorers will need to determine:
- Its estimated eligible greenfields exploration expenditure for the period 1 July 2017 – 30 June 2018;
- Its estimated tax loss for the year ended 30 June 2018;
- Its estimated tax rate for the year ended 30 June 2018; and
- Its estimated capital to be raised for the income year.
The above information will need to be included in the ATO’s Junior Minerals Exploration Incentive Participation Form and lodged electronically via the ATO tax agent or business portal.
Not all exploration expenditure is eligible under the JMEI scheme and determining a company’s eligible greenfields exploration expenditure for JMEI purposes requires careful consideration of the scope and scale of the company’s activities and the nature of the expenditure incurred. We have specialists who can assist with the preparation and management of the JMEI process and the calculation of eligible expenditure to ensure completion of the necessary applications by 16 April 2018.
Further information regarding the operation of the JMEI, as well as copies of the relevant ATO forms, can be found at www.ato.gov.au/business/JMEI/