Resource taxes 2012

The mining withholding tax under Division 11C of the Income Tax Assessment Act 1936: It may be simple but is it equitable?

Source: Australian Tax Forum Journal Article

Published Date: 1 Feb 2012

 

Division 11C of the Income Tax Assessment Act 1936 (Cth) was introduced in 1979 and imposes a withholding tax currently at the rate of 4 per cent on payments made in respect of mining on indigenous land. It was introduced by the Coalition Federal Government as a result of the enactment of land rights legislation in the Northern Territory. Although commentators in the areas of anthropology, economics and indigenous land rights have written extensively about this tax no one has analysed it from an income tax policy perspective. Many reviews of the Australian tax system including the most recent the Review of Australia’s Future Tax System (the Henry Review) state that for a tax system to be considered ‘good’ it should be simple, efficient, equitable, sustainable and be consistent with policy objectives.However there are often tensions between each of these goals particularly in the
balance between simplicity and equity.

This paper analyses the current withholding tax regime found in Division 11C from the tax policy perspectives of simplicity and equity. It suggests that the current regime is simple however it imposes many indirect inequities. Further, it argues that the mining withholding tax is potentially inconsistent with income tax principles and other income tax laws. It should be noted that this tax regime is very different to the proposed Minerals Resource Rent Tax and will not be replaced by this tax. A discussion of the proposed Minerals Resource Rent Tax is therefore outside the scope of the paper.

Author Profile
Binh Tran-Nam

Author Profile
Fiona Martin CTA

Sorry, this is subscriber only content.

To gain access to this material and much more - Subscribe Now.

(Note: Members can access Taxation in Australia journal articles without a Tax Knowledge Exchange subscription - please log in to access).

Already a Subscriber? Login now

Already a Subscriber? Login now

Details

The material is copyright. Apart any fair dealing for the purpose of private study, research criticism or review, as permitted under the copyright Act, no part may be reproduced by any process without written permission from The Tax Institute.

Unless expressly stated, opinions are not that of The Tax Institute, which accepts no responsibility for the accuracy of any of the information contained within it.

The Tax Institute
(ABN 45 008 392 372 (PRV14016))

("TTI")

The Tax Institute is a Recognised Tax Agent Association (RTAA) under the Tax Agent Services Regulations 2009. 

Copyright Statement

All materials provided on this site are protected by copyright and are owned by or licensed to TTI.

Except as expressly permitted by TTI or the copyright owner, any person or company who uses this site must not use, reproduce, redistribute, retransmit, publish or otherwise transfer, or commercially exploit, the materials or any information, software or other content, in whole or in part, which is available through this site.

Tags

Resource taxes 2012

Share this page