Michael Sukkar (Deakin, Liberal Party, Assistant Minister to the Treasurer) Share this | Hansard source

Firstly, I want to take this opportunity to thank all members for contributing to this debate. As has been discussed, this bill provides a tax incentive for investment in small minerals exploration companies undertaking greenfield exploration in Australia. The government understands that the future prosperity of the mining sector is ultimately dependent on our ability to make new minerals discoveries, and the new junior minerals exploration incentive will help encourage investment needed to pave the way for resources sector prosperity long into the future.

It's small minerals exploration companies that undertake most of the exploration in greenfield areas for new discoveries. Exploration for minerals often involves significant expenditure and, ultimately, risks. While larger established mining companies are generally in a position to fund activities from their own activities and profits, smaller companies which focus solely on exploration are dependent on attracting investment to fund their exploration activities. However, the lack of certainty on exploration success can make it naturally difficult for these companies to raise the necessary capital. Australian resident investors of these companies will therefore receive a refundable tax offset where the companies choose to give up a portion of their tax losses relating to their exploration expenditure in an income year. The total value of the incentive available to new investors over four years will be $100 million from 2017-18.

The new incentive builds on the former exploration development incentive with improvements to address some of the issues that affected the take-up of the previous scheme. Eligibility for the investment is limited to investors that purchase newly issued shares. This ensures that the benefit of the incentive only goes to those investors who contribute new capital to fund, importantly, new exploration activities. Further, the incentive is allocated between eligible exploration companies using a first come, first serve process which will be faster than the previous scheme. Small exploration companies will know with certainty up-front just how many credits they have been allocated by the Commissioner of Taxation. The amendments to the excess exploration credit tax will ensure the fairness and integrity of this very important incentive. I, therefore, commend this bill to the House.

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