Repeal of Mining Tax Secured at Super Cost

After a previous failed attempt and almost a year of debate in the Parliament, the Federal Government has finally secured the repeal of the "Minerals Resource Rent Tax" or "Mining Tax" as it is more commonly known.

In the space of just two days (1-2 September 2014) the Minerals Resource Rent Tax Repeal and Other Measures Bill 2014 has been rushed through both houses of Federal Parliament after being introduced into the Representatives and passing through all stages on the 1 September 2014 and being passed through all stage in the Senate on 2 September 2014.

Repeal of the Mining Tax sees the Federal Government achieve "the double" in terms of its core election promises, it having already repealed the Carbon Tax. A double which on both occasions has seen the support of the Palmer United Party (the PUP) instrumental in the government's legislation being passed.

Given that the deal struck with the PUP now sees the government’s promise to increase the rate of compulsory superannuation to 12% delayed beyond 2022 to 2025, it could be said that abolition of a tax (a tax that by all reports was not raising the expected revenue) has come at a "super cost".

Certainly the abolition of the mining tax delivers a core promise of the Coalition Government on the  first anniversary of  its election but it can, beyond debate of the meaning of the word "adverse", also be said that, the delay in the compulsory superannuation rise breaks yet another commitment by the Coalition Government to leave superannuation untouched and not the subject of "knee-jerk amendments" designed to meet political rather than good social outcomes.

Basic Provisions of the Repeal Legislation

The Bill as passed through the Parliament repeals the following Federal Acts that created the Mining Tax:

• Minerals Resource Rent Tax Act 2012;
• Minerals Resource Rent Tax (Imposition - Customs) Act 2012;
• Minerals Resource Rent Tax (Imposition -Excise) Act 2012; and
• Minerals Resource Rent Tax (Imposition - General) Act 2012.

The Bill also amends the Income Tax Assessment Act 1997 and Income Tax (Transitional Provisions) Act 1997 to provide that companies can carry tax losses forward to use as a deduction for a future year. It further amends  the Income Tax Assessment Act 1997 to amend the instant asset write-off threshold provisions for small business entities; provide that motor vehicle purchases made by small business entities will be treated as normal business assets for depreciation purposes; and provides that geothermal energy exploration and prospecting expenditure are no longer immediately deductible.

Controversially, as already discussed above, the Superannuation Guarantee (Administration) Act 1992 is amended to delay increases in the superannuation guarantee rate for a two-year period and the Superannuation (Government Co-contribution for Low Income Earners) Act 2003 is amended to abolish the low income superannuation contribution.

The Social Security Act 1991 and the Social Security (Administration) Act 1999 are amended to abolish the income support bonus payment. The A New Tax System (Family Assistance) Act 1999, A New Tax System (Family Assistance) (Administration) Act 1999, Income Tax Assessment Act 1997 and Social Security (Administration) Act 1999 are amended to abolish the schoolkids bonus payment.

The legislation also makes consequential amendments to a further 13 Acts.

Reaction to the Repeal and Delays to Super

The AFR quotes the PM as telling parliament:

While the leader of the opposition is reported by The Conversation as saying that the Prime Minister had promised Australians:

The Shadow treasurer Chris Bowen is reported by The Conversation to have said that: "the government had broken a commitment [namely, no adverse effects on super] to almost nine million Australians".

The AFR reports PUP's leader Clive Palmer as saying the repeal would mean that: "foreign mining investments would now return to Australia and create jobs". He is reported to have defended delays to increased compulsory superannuation contributions that will come as a result of the move and to have denied helping the government break another election promise. He is quoted as saying: ". . . it’s more important for Australian families to have access to those funds now, not in 50 years".

The AFR reports that the breaking of the promise on superannuation guarantee came despite pleas from the superannuation industry for certainty and stability. The AFR quotes David Whiteley, the chief executive of Industry Super Australia:

The Conversation reports the Australian Chamber of Commerce and Industry as applauding the government, PUP and other minors as,

It will be interesting in the long term to see how the Government will justify increasing pension eligibility age to 70 and other like measures in its first budget, which it argues are to provide for an ageing population - with - delaying compulsory superannuation contribution rises, a measure viewed by many as a counter productive step towards those same goals of providing for and being able to afford the future of older Australians.

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• Minerals Resource Rent Tax Repeal and Other Measures Bill 2014 and supporting materials as reported in the TimeBase LawOne Service.
• Coalition strikes deal on super to repeal mining tax (AFR - 2 September 2014)
• Mining tax repealed but compulsory super increase delayed (The Conversation - 2 September 2014)