This is in response to the small threat entitled 'super tax'The...

This is in response to the small threat entitled 'super tax'

The second draft of the Minerals Resource Rent Tax ("MRRT") was released about 2 weeks ago. The MRRT is a 'watered down' version of the Resource Super Profits Tax announced by KRudd about 12 months ago.

The MRRT only seeks to tax profits made at the point of estraction (I.e. The ROM stockpile). Thus the sale price must be reduced by an amount which reflects the value added by the company between the ROM stockpile and the point of sale, which is usually the port as coal is sold on an FOB basis.

As well as this allowance, companies are also entitled to a deduction for the market value of their mine. Typically this is done by amortizing the market value of the mine over a 25 year period, thus entitling the company to a deduction of 1/25 of the value of their mine each year. This can provide an effective shield against the MRRT.

Furthermore, companies are also entitled to deduct any royalty payments, mining expenses and carried forward losses made from mining.

If there is a "profit", it is taxed at 22.5%.

Thus the degree to which the tax affects MTE is largely dependent on the profitability of their mine, coal prices and the value of their mine.

Hope this helps