| Are you involved with a mining company? | | | | In some cases, the offshore entity may be an |
| At a glance: The ATO ( Australian Tax Office ) is | | | | intermediary or related party of the mining company |
| warning mining companies about entering into | | | | usually located in a tax haven. |
| arrangements that allow them to claim an immediate | | | | The Tax Office has warned that such arrangements |
| deduction for future mining rehabilitation's. | | | | may result in various taxation issues including: |
| In a recent Taxpayer Alert, the Tax Office has | | | | - whether the arrangements are shams; |
| warned mining companies about schemes which aim | | | | - whether the mining company is entitled to the |
| to bring forward tax deductions for mining rehabilitation. | | | | deduction; |
| According to the Tax Office, the schemes operate as | | | | - whether the deduction may be reduced as a |
| follows: | | | | non-arms length transaction; |
| - The mining company has a future obligation to | | | | - whether the income received by the offshore entity |
| rehabilitate the mine site after mining ceases; | | | | is assessable Australian sourced income; and |
| - The mining company pays for and enters into an | | | | - whether other provisions of the tax legislation apply; |
| arrangement with an offshore entity which agrees to | | | | such as the transfer pricing and controlled foreign |
| carry out rehabilitation of the mine site in the future; | | | | company provisions. |
| - The mining company then claims an immediate tax | | | | Remember: Ensure you are aware of the ATO's |
| deduction for the payment while the offshore entity | | | | warning about mining rehabilitation schemes. Visit the |
| does not declare the payment as assessable income | | | | Australian Taxation Office website for more |
| in the financial year it receives it. | | | | information about the mining rehabilitation schemes. |