On 2 May 2010 the Henry Review of Australia's Future Tax System was released. In responding to the Henry Review, the Australian Government has indicated that it intends to accept the Review's recommendation to introduce a new tax called the Resources Rent Tax (Resources Tax) which will apply to Australian resources projects. It appears that the proposed tax would apply to all mining and petroleum projects (other than those currently subject to the Petroleum Resources Rent Tax). It is intended to apply to all companies directly involved in the exploration of Australia's non-renewable resources. Existing resources projects will be subject to the Resources Tax.

The tax will be payable at the rate of 40 per cent. The amount of any Resources Tax paid by a company will be deductible from the assessable income upon which normal company tax is assessed (currently 30 per cent).

Australia's national newspaper, The Australian, quoted the comments of "global law firm, Norton Rose" that

"the full implications and effects are still unclear. These things are not without consequences. While Australia's resource quality and proximity will still be attractive, it will certainly cause Chinese investors to pause".

The Resources Tax is not yet law in Australia and may not become law. The draft law will likely go before the Australian Parliament in late 2011, and if the Resources Tax becomes law, it is intended to apply from 1 July 2012.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.