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Mining Tax
The Mineral Resource Rent Tax (MRRT)

The Mining Tax (MRRT) and what it means for investors:

Nathan Lear
Partner/Private Client Adviser
25 Mar 2012

The Mineral Resource Rent Tax (MRRT) legislation cleared its final hurdle and passed the Senate during the week to mixed opinions. 

The controversial mining tax will impose an additional 30 per cent tax on the exorbitant profits of Australia’s top mining companies and is expected to raise $12 billion in revenue for the Government over its first three years.

The new tax means that Australian mining companies will be taxed over and above the standard company tax rate on their profits.

What does this mean for you as an investor?

Well, the proposed tax does not pass on any additional franking credits to investors.

Before the dividend imputation system, the tax office would tax both the companies and the investor, even though this money has already been taxed, so it was a form of double taxing. The Australian Dividend Imputation System that was introduced in 1987 fixed this by providing a franking credit to investors to put a stop to the double taxation of company dividends.  

Are we returning back to the days of double taxation?

The answer is yes! The new mining tax has no franking element, meaning that shareholders will effectively pay double tax on the extraordinary profits of some of our top miners. This provides a clear disadvantage to shareholders of large Australian mining companies such as BHP and RIO.

However whilst the Chinese juggernaut continues to power along, quality Australian mining companies should continue to generate attractive returns to investors.




Hewison Private Wealth is a Melbourne based independent financial planning firm. Our financial advisers are highly qualified wealth managers and specialise in self managed super funds (SMSF), financial planning, retirement planning advice and investment portfolio management. If you would like to speak to a financial adviser on how you can secure your financial future please contact us 03 8548 4800, email info@hewison.com.au or visit www.hewison.com.auPlease note: The advice provided above is general information only and individuals should seek specialised advice from a qualified financial advisor. The views in this blog are those of the individual and may not represent the general opinion of the firm. Please contact Hewison Private Wealth for more information.