On 10 November 2011, the Senate referred the provisions of the following
11 bills to the Economics Legislation Committee for inquiry and report by
14 March 2012:
Minerals Resource Rent Tax Bill 2011;
Minerals Resource Rent Tax (Consequential Amendments and
Transitional Provisions) Bill 2011;
Minerals Resource Rent Tax (Imposition—Customs) Bill 2011;
Minerals Resource Rent Tax (Imposition—Excise) Bill 2011;
Minerals Resource Rent Tax (Imposition—General) Bill 2011;
Petroleum Resource Rent Tax Assessment Amendment Bill 2011;
Petroleum Resource Rent Tax (Imposition—Customs) Bill 2011;
Petroleum Resource Rent Tax (Imposition—Excise) Bill 2011;
Petroleum Resource Rent Tax (Imposition—General) Bill 2011;
Superannuation Guarantee (Administration) Amendment Bill 2011;
Tax Laws Amendment (Stronger, Fairer, Simpler and Other Measures)
The bills seek to introduce the Minerals Resource Rent Tax (MRRT); a tax
on the economic rents mining companies make from the extraction of certain non‑renewable
Further progressing the government's agenda for reforming the tax
treatment of the resource sector, the bills also seek to extend the coverage of
the existing Petroleum Resource Rent Tax (PRRT). The PRRT is a tax on the
economic rents derived from the extraction and early processing of petroleum,
and currently applies to projects in Commonwealth waters with some exceptions. The
bills would extend the coverage of the PRRT so that it applies to all offshore
and onshore petroleum projects, such as the North West Shelf and onshore coal
seam gas projects.
The bills also seek to make a number of improvements to the
superannuation and business tax systems which are linked to the revenue
expected to be gained from the MRRT. The bills will increase the superannuation
guarantee charge from 9 per cent to 12 per cent, remove the age limit
associated with these contributions and will introduce a government
superannuation contribution for low income earners. The bills also seek to make
a number of amendments to improve and simplify small business taxation
Conduct of the inquiry
Details of this inquiry were advertised in The Australian and on
the committee's website. The committee also wrote to relevant companies, organisations,
academics and individuals inviting submissions. In total, the committee
received 32 submissions. Details about these submissions can be found in Appendix 1.
The committee held two public hearings in Canberra on 21 and 22 February
2012. Evidence was given by mining companies, peak industry associations,
public policy think tanks, academics, trade unions, superannuation funds,
superannuation industry bodies, Treasury and the Australian Taxation Office. The
witnesses who appeared at these hearings are listed in Appendix 2.
The committee thanks all of the individuals and organisations that participated
in this inquiry.
Examination by the Senate Scrutiny of Bills Committee
The Senate Standing Committee for the Scrutiny of Bills assesses
legislative proposals against a set of accountability standards that focus on
the effect of proposed legislation on individual rights, liberties and
obligations, and on parliamentary propriety.
In its final Alert Digest of 2011, the Scrutiny of Bills
Committee outlined its comments on the bills. That committee's comments on the bills
against its terms of reference were limited to a specific provision in the Minerals
Resource Rent Tax (Consequential Amendments and Transitional Provisions) Bill
2011 which it considered had retrospective effect, the need for which was not sufficiently
justified in the Explanatory Memorandum. The Scrutiny of Bills Committee
requested a fuller explanation from the Minister on this issue.
Outline of the report
This report consists of eight chapters which are briefly described
Chapter 2 provides an overview of some of the positive impacts
the mining boom is having on the Australian economy, and some of the immediate
and long‑term challenges for the economy it is linked to. The chapter then
outlines the rationale for introducing a resource rent tax for the minerals
sector and describes the policy development process undertaken for the MRRT.
Chapter 3 summarises how the MRRT is intended to operate.
Chapter 4 discusses the revenue projections associated with the
MRRT as well as the arguments put forward regarding the impact the MRRT will
have on future investment.
Chapter 5 examines the concerns expressed by small and emerging
miners regarding various aspects of the MRRT, such as its adherence to the
principle of competitive neutrality, the low profit offset, the simplified
obligations designed to reduce administrative burden for small miners, the
concerns of the magnetite industry and a number of other specific issues with
the design of the MRRT.
Chapter 6 examines the proposed extension of the PRRT to all
offshore and onshore petroleum projects.
Chapter 7 considers some of the key ways in which revenue from
the MRRT will be used to ensure the benefits of the mining boom are shared with
the wider community. That chapter examines the proposed increase in the
superannuation guarantee charge from 9 per cent to 12 per cent, the removal of
the age limit for those contributions and the proposed low income
Chapter 8 discusses the proposed changes to certain small
business taxation measures, including the abolition of the entrepreneurs' tax
offset, increase in the small business instant asset write-off threshold,
simplification of asset depreciation arrangements and the introduction of
accelerated initial deductions for purchases of motor vehicles by small
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