Completing the form
To participate in the Junior Minerals Exploration Incentive (JMEI), you need to notify us of the following items. Provide estimates for the income year in which you're applying to participate:
- greenfields minerals expenditure
- tax loss
- corporate tax rate applicable to you
- amount of capital you intend raising.
You can notify us by completing the Junior Minerals Exploration Incentive Participation form (NAT 74949) and lodging it through Online services for business or Online services for agents.
Lodgment due dates
If you wish to participate in the JMEI, you need to lodge your participation form within the times and dates outlined in the table below:
|
Income year |
Application period opens |
Application period closes |
|---|---|---|
|
2021–22 |
9:00 am AEST on 16 July 2021 |
11:59 pm AEST on 15 August 2021 |
|
2022–23 |
9:00 am AEST on 1 June 2022 |
11:59 pm AEST on 30 June 2022 |
|
2023–24 |
9:00 am AEST on 1 June 2023 |
11:59 pm AEST on 30 June 2023 |
|
2024–25 |
9:00 am AEST on 4 June 2024 |
11:59 pm AEST on 30 June 2024 |
Participation in the JMEI is voluntary and participation is on a first come, first served basis.
You must lodge your participation form within the timeframes in this table. Participation forms received before the opening of the application period or those received after the application period closes won't be considered.
If you have a substituted accounting period (SAP), you need to link your application to the financial year corresponding to your SAP income year.
This means you may have to estimate the greenfields minerals expenditure you expect to incur during the remainder of your income year.
Allocation of an exploration credit amount
We will consider all JMEI applications in the order we receive them until the annual exploration cap for the particular year is exhausted. The maximum amount of the annual exploration cap you can access is 5%.
We'll determine your exploration credit allocation for the relevant income year based on the information you provide. We'll notify you of your allocation in writing as soon as practical after you've lodged your application.
If we have information that raises concerns about the reasonableness of your application, you may be prevented from participating in the JMEI for that year. In assessing the reasonableness of your application, we may consider whether you:
- meet the eligibility requirements for participating in the JMEI
- have a history of failed capital raisings
- have no previous experience in undertaking exploration activities
- are an entity that is an affiliate of, or connected with, another entity that has carried on or is carrying on mining operations.
If we receive your application after the annual exploration cap has been exhausted, you won't receive an exploration credit allocation. If you don't receive a written notification from us about the status of your application and allocation of exploration credits, your allocation of exploration credits for the relevant period is nil.
Exploration investments and creating exploration credits
An exploration investment arises when you issue ordinary shares to an investor on or after the day the Commissioner has provided you with an exploration credit allocation and before the end of that income year. You cannot issue exploration credits in relation to existing equity interests.
You can go to market to raise new capital as soon as you've received a written determination from us stating your exploration credit allocation for a particular income year. Once you've conducted your capital raising, you can create and issue exploration credits to your investors who make an exploration investment.
To create credits, you must first have:
- lodged your tax return
- been assessed for income tax for the income year which relates to the year you're creating exploration credits for.
You can only make one decision to create an amount of exploration credits for an income year and cannot revoke or modify that decision.
The maximum amount of credits you can create for an income year, is the lesser of the following – your:
- actual greenfields exploration expenditure for the income year multiplied by your corporate tax rate for the income year
- actual tax loss for the income year multiplied by your corporate tax rate for the income year
- exploration credits allocation determined by us plus any unused portion of your exploration credits allocation relating to the preceding income year.
The amount of exploration credits you create cannot exceed the maximum amount of exploration credits you're actually able to distribute.
Note: You can't have an unused allocation of exploration credits from the 2020–21 income year in the 2021–22 income year.
Example: work out the maximum amount of exploration credits
For the 2018–19 income year, GreenfieldCo had:
- a corporate tax rate of 30%
- incurred greenfields exploration expenditure totalling $1 million
- incurred a tax loss of $750,000
- received an exploration credits allocation totalling $400,000.
The maximum amount of exploration credits GreenfieldCo can create is $225,000 being the $750,000 tax loss multiplied by the 30% corporate tax rate that applied for the income year.
End of exampleAfter you've created exploration credits for an income year, you must reduce your tax loss by dividing the total amount of exploration credits you created by the corporate tax rate that applied to you for that year. If there are losses remaining, you need to amend the relevant losses schedule that accompanies your income tax return to reflect the amount of losses remaining.
Example: amend tax return to disclose losses
GreenfieldCo creates $210,000 of exploration credits for the 2018–19 income year.
Therefore, GreenfieldCo will need to reduce its tax loss by $700,000 ($210,000 ÷ 30%). GreenfieldCo will then need to amend its 2018–19 income tax return to disclose the $50,000 ($750,000 − $700,000) balance in the 2019 losses schedule. This amount may be available to offset future assessable income amounts.
End of exampleIssuing exploration credits
You can only issue exploration credits to investors who made an eligible exploration investment for the income year or the immediately preceding year. The amount of exploration credits you issue to an investor is limited by:
- the amount of eligible exploration investment made by that investor multiplied by the income tax rate that applied to you for the income year.
Example: work out amount of exploration credit to issue to investors
For the 2019–20 income year, GreenfieldCo receives an exploration credit allocation of $300,000 and:
- raises $1 million in capital, which is an eligible exploration investment
- incurs eligible greenfields exploration expenditure of $8 million
- incurs a tax loss of $8.5 million
- is subject to a corporate tax rate of 30%.
Despite incurring eligible greenfields exploration expenditure of $8 million, the fact that GreenfieldCo was only able to raise $1 million in capital means the amount of exploration credit that can be issued to eligible investors is $300,000 (30% of $1 million).
End of exampleIn issuing exploration credits, you must first determine which of the 3 potential scenarios apply to you.
Scenario 1 – No unused allocation of exploration credits from the preceding year:
- You can only issue credits to investors that made an exploration investment in the relevant income year.
- You cannot issue exploration credits to investors that made an exploration investment in the preceding year.
Scenario 2 – Exploration credits created for the year exceed the unused allocation of exploration credits from the preceding year:
- You must issue credits to investors who invested in the immediately preceding year before you issue them to those who made an investment in the relevant income year.
Scenario 3 – Exploration credits created for the year are equal to or less than the unused allocation of exploration credits from the preceding year:
- You'll only have sufficient credits to issue to investors who invested in the preceding year.
- The amount of credit you issue to an investor cannot exceed the amount of the investor’s exploration investment multiplied by the corporate tax rate that applies to you for the relevant income year.
Exploration credits that you create but do not issue will expire.
Example: work out amount of exploration credits that will expire
During the 2018–19 income year, GreenfieldCo raises $600,000 in capital after receiving an exploration credit allocation from us.
Therefore, GreenfieldCo will only be able to distribute $180,000 of the exploration credits despite creating $225,000 in exploration credits.
As a result, $45,000 worth of exploration credits will expire at the end of the income year.
End of exampleNotifying eligible investors of their entitlement to exploration credits
You must provide written notification to investors who made an exploration investment that contains the following:
- your entity name
- your Australian business number (ABN)
- the date the exploration credits are issued and the income year in which they must be included in the investor's tax return
- the amount of exploration credits issued to the investor under Subdivision 418-E of the Income Tax Assessment Act 1997 (ITAA 1997)
- a statement that the issuing of the exploration credits complies with section 418-120 of the ITAA 1997.
Notifying us of the issuing or expiry of exploration credits
For each relevant income year, you must notify us of the amount of exploration credits you:
- issued
- have created and have now expired.
You can do this by completing the notification of the issue or expiry of exploration credits form (NAT 74948) and lodging it with us.
Notifying us if there is no exploration investment in the same income year exploration credits have been allocated
For each relevant income year, you must notify us if:
- the Commissioner has made a determination under section 418-101 allocating the entity exploration credits for an income year; and
- no exploration investment is made in the corresponding income year.
You can do this by completing the junior minerals exploration incentive notification of no exploration investment form (NAT 75426). Lodge it with us within 30 days after the end of the income year.
If no exploration investment is made in the income year, the amount of your exploration credits allocation for the income year is nil.
Example: amount of credits allocated if no investment is made
During the 2021–22 income year, DeanCo didn't raise any capital after receiving an exploration credit allocation from us. Therefore, DeanCo’s exploration credits for the 2021–22 income year will be nil.
End of exampleWhen you need to notify us
If you're an investment body for Part VA investments, you must lodge this form on or before the due date of your annual investment income report for the subsequent income year.
For all other entities, you must lodge this form on or before the due date of your tax return for the subsequent income year.
Notifying us of the distribution of excess exploration credits
If you have distributed exploration credits in excess of your maximum exploration credit amount, you'll be liable to pay tax equal to the amount of the excess issued. You may also be liable for interest and penalties.
Where this occurs, you must lodge an excess exploration credit tax return (JS 36219). You must also pay any amount of excess exploration credits tax by 21 July of the financial year corresponding to the income year in which you distributed the excess exploration credits. Penalties and interest may apply if you don't lodge or pay on time.