Announcement date
25 November 2024
Link to announcement
Production tax incentives to help build a Future Made in Australia
Problem being addressed
Supply chain concentration and the vulnerability of the critical minerals supply chain to market shocks due to the concentrated nature of the downstream processing and refining of critical minerals. Private firms are failing to appropriately price in the required level of economic resilience and security in critical sectors and supply chains.
Additionally, the cost gap between production costs in Australia and other overseas markets due to high labour costs, environmental standards and the cost of capital. This is exacerbated by industry support being provided by other Governments to attract investment.
Proposal
Provide a Critical Minerals Production Tax Incentive (CMPTI) that will be available for up to 10 years per facility, for production between 2027-28 and 2039-40. The CMPTI will provide a time-limited and uncapped 10 per cent refundable tax offset, delivered through the tax system for constitutional corporations subject to tax in Australia.
Taxpayers will be able to elect when to start claiming the CMPTI, so that they can commence the 10-year period at the most opportune time for them.
Assessed Impact Analysis outcome
Adequate
Assessment comments
The Impact Analysis (IA) is consistent in its quality across the seven IA questions, but to be considered ‘good practice’ under the Australian Government Guide to Policy Impact Analysis the IA would have benefitted from further analysis across all questions, including further detail about the costs and benefits.
Regulatory burden
The Treasury estimates these measures will result in an increase in average regulatory costs of $22,000 per year, over ten years. This will consist of $100,000 per claimant for implementation, and $12,000 per year for ongoing reporting requirements.
Note: Information used in the decision making has been redacted for the public version of the IA. This information is classified Commercial-in-confidence or National Security or may refer to Confidential stakeholder submissions.