JDVictoria, I believe you are incorrect when you posted "Oh common! The tax comes in after a profit!"
Project financing is NOT taken into account. So just looking at that if a project makes $100 million profit before $50 million in interest is taken into account then after 40% is taken you are left with $60 million from which to pay $50 million in interest, company tax etc.
However things are not so simple.
There are so many interpretations I have read by media commentators. From what I have read this tax is amazingly complex and could even turn out to be close to a 40% tax on project cashflow!!! This would be a disaster. I've even read that inputs of a project are taxed at 40% which would be totally crazy. In other words a company is taxed on the development costs of its project.
This would be madness, but nothing would surprise me as unintended consequences of this extremely complex tax that is masqueraded as something very simple to explain and understand by Rudd.
There is so much misinformation going around it is hard to know what is true. It's a pity the truth isn't clear cut and simple for everyone to see and understand.
But what is clear is that BHP's future income, BHP's future dividends and BHP's future share price will be much, much lower with this massive new tax grab than they will be without it.
What is also clear is that BHP has a choice of large, new projects in different countries with differing taxes and political risk. Australia will go to the bottom of the rankings for new project investments.
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