rrt - the age, page-12

Heres an example of how the tax works from the Money Morning newsletter today - thanks Chris Sayce

I don't know if this is the correct interpretation.

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Heres a worked example of how the Super Profits tax would work...

Lets say a mining company starts up with $8 million of capital. Which it invests in searching for raw materials.

Then lets say the mining firm generates $10 million of revenue.

Now lets minus $9 million of operating costs. That gives a gross profit of $1 million.

Then under this new Super Profit tax the mining company gets to earn a "normal" rate of return which is set at the 10 year government bond rate. For example, 6%. 6% of $8 million (the starting capital) is $480,000.

So, the mining company's net profit, is $1 million, less the $480,000 deduction which leaves a Super Profit of $520,000. This is taxed at 40%.