- Transfer duty relief to continue for eligible farm-in agreements involving mining tenements
- Amendments will preserve integrity of concession and ensure equitable outcomes for taxpayers
A farm-in agreement facilitates investment by an outside party in exploration and development of a mining tenement. These agreements have received a duty concession for at least 25 years.
The effect of the concession is to encourage the exploration of existing mining tenements for mineral resources. However, issues with the current legislation prevent the concession from operating as it has always been administered.
The absence of corrective action will see the perverse outcome of the concession not being available for agreements that have always been eligible, and duty relief being granted in circumstances it was never meant to apply.
The Duties Act 2008 will be amended to exclude agreements from accessing the concession where the exploration amount involves capital expenditure in connection with mining operations as defined in the Mining Act 1978 or to establish, construct or improve mine infrastructure to allow mining operations to be carried out.
These amendments will be backdated to the date of this announcement. Duty relief has never been allowed for these types of agreements and the amendments will ensure the concession operates appropriately.
Other amendments to apply from the date of this announcement will ensure duty is assessed on all consideration paid for a farm-in transaction other than the exploration amount. This will restore the historical operation of the concession.
A number of amendments will be backdated to July 1, 2008 to support concessions that have previously been approved and allow the concession to apply to new transactions. This includes ensuring the concession applies to multi-stage farm-in arrangements and agreements that involve small amounts of non-exploration expenditure (such as administration or land access costs).
These and other minor amendments will be introduced into the Parliament next year.
Comment attributed to Finance Minister Ben Wyatt:
"The amendments to the farm-in legislation will allow eligible agreements involving exploration activities to continue to benefit from generous duty relief. They will also ensure the concession is administered in a manner consistent with longstanding practice, whilst maintaining the integrity of the concession and the State's revenue."
Minister's office - 6552 5900