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MRRT and Carbon Tax: Issues for financiers and funds paper

Published on 13 Feb 13 by NATIONAL DIVISION, THE TAX INSTITUTE

The MRRT will have a significant impact on pricing of projects and security positions. Financiers and funds will need to be aware of:

  • core mining project interest identification provisions, particularly in the case of joint venture arrangements, passive JV investors, farm-in arrangements and offtake arrangements
  • concessions that certain miners may claim that have the impact of eliminating allstarting base value and MRRT deductions, impacting on value for funding and security enforcement
  • transfer of MRRT loss provisions and impact on project valuation
  • treatment of expenses, in particular, financing expenses, lease expenditure, hire purchase fees, hedging expenses and security deposits
  • ensuring tax sharing agreements are appropriately updated to remove the risk of joint and several liability for tax liability across entities within a MRRT consolidated group
  • issues for financing M&A activity.

Financiers and funds will also need to consider the impact of carbon pricing on projects and investment, particularly:

  • identifying entities that will be required to surrender emissions units in respect of emitting activity, including through operator and control provisions
  • understanding liability criteria and impacts of failure to comply
  • understanding carbon price path
  • anticipating development of derivatives following the fixed price period.

Author profile

Teresa Dyson
Photo of author, Teresa DYSON Teresa Dyson is a professional company director who has enjoyed a long career as a tax adviser, previously as a tax partner at each of Ashurst and Deloitte and as a Consultant at McCullough Robertson. Now Teresa has a broad portfolio of directorships, including as a non-executive director and Audit & Risk Committee Chair of ASX-listed Seven West Media Ltd and Genex Power Ltd. Teresa is also a director of Energy Queensland Ltd, Energy Super, Power & Water Corporation (NT) and Deputy Chair of the Gold Coast Hospital & Health Board, and a member of the Foreign Investment Review Board, the Takeovers Panel and the National Housing Finance & Investment Corporation. Teresa is also a member of the boards of not-for-profit entities including UN Women National Committee Australia, Opera Queensland and Foundation for Alcohol Research & Education. Teresa has had a broad legal practice advising on taxation issues affecting infrastructure, financial structuring, social infrastructure and taxation law. Teresa has previously been Chair of the Board of Taxation and Chair of the Law Council of Australia, Business Law Section and was named Woman Lawyer of the Year in 2011 by the Women Lawyers Association of Queensland. - Current at 02 November 2018
Click here to expand/collapse more articles by Teresa DYSON.

 

This was presented at 2013 Financial Services Tax Conference .

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