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MRRT and Carbon Tax: Issues for financiers and funds paper


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 CTA
Photo of author, Teresa DYSON Teresa is a Consultant at McCullough Robertson with over twenty years’ advising clients on infrastructure, financing, corporate tax issues, M&A activity and tax controversy matters. Teresa is actively involved in the legal and tax professions and is the former Chair of the Board of Taxation and Chairman of the Business Law Section of the Law Council of Australia. - Current at 18 August 2016
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This was presented at 2013 Financial Services Tax Conference .

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