Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES

PART 3-45 - RULES FOR PARTICULAR INDUSTRIES AND OCCUPATIONS

Division 418 - Exploration for minerals

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Subdivision 418-E - Issuing exploration credits

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History

Subdiv 418-E substituted by No 15 of 2018, s 3 and Sch 1 item 2, effective 1 April 2018. For application and transitional provisions, see note under Subdiv 418-DA heading. Subdiv 418-E formerly read:

Subdivision 418-E - Issuing exploration credits
SECTION 418-110 Issuing exploration credits
418-110(1)
An entity that has created *exploration credits for an income year may issue any of those exploration credits to *members of the entity, in respect of *shares that:

(a) are*equity interests; and

(b) are held by the members.

418-110(2)
The *exploration credits are issued by giving each of the *members a statement in the *approved form.

418-110(3)
The issuing of *exploration credits is of no effect unless:

(a) the statements under subsection (2) are given to the *members on or before the first 30 June after the day on which the modulation factor in respect of the income year is declared under section 418-90; and

(b) the issuing of credits complies with section 418-120.
SECTION 418-115 Restricting exploration credits to post 1 July 2014 shares
418-115(1)
An entity may, before it has issued any *exploration credits for any income year, choose to restrict the issuing of exploration credits to issuing exploration credits in relation to *shares that:

(a) are*equity interests; and

(b) have come into existence on or after 1 July 2014.

418-115(2)
A choice under this section is irrevocable.
SECTION 418-120 Exploration credits to be issued on a proportionate basis
418-120(1)
An entity issuing *exploration credits for an income year must ensure that the total number of exploration credits issued to any *member of the entity for the year, expressed as a percentage of the total number of all exploration credits issued to the members of the entity for the year, is the same as:

(a) if the entity has made a choice under section 418-115 - the total number of *shares in the entity that:

(i) are *equity interests held by the member; and

(ii) have come into existence on or after 1 July 2014;
expressed as a percentage of the total number of the shares in the entity that:

(iii) are equity interests held by any members of the entity; and

(iv) have come into existence on or after that day; or

(b) otherwise - the total number of shares in the entity that are equity interests held by the member, expressed as a percentage of the total number of the shares in the entity that are equity interests held by any members of the entity.

418-120(2)
For the purposes of this section, the number of *shares that a *member holds in the entity is taken to be the number that the member held on the day occurring 30 days before the *exploration credits were issued.
SECTION 418-125 Expiry of exploration credits
418-125
An *exploration credit created by an entity for an income year expires if the entity does not issue the credit under this Subdivision on or before the first 30 June after the day on which the modulation factor in respect of the income year is declared under section 418-90. SECTION 418-130 Notifying the Commissioner of issuing or expiry of exploration credits
418-130(1)
An entity that has created *exploration credits for an income year must notify the Commissioner of the issuing or expiry of the credits.

418-130(2)
The notice must:

(a) be in the *approved form; and

(b) be given to the Commissioner on or before the due date:

(i) if the entity is an *investment body for *Part VA investments - for giving to the Commissioner an *annual investment income report in respect of the *financial year corresponding to the income year; or

(ii) otherwise - for the entity to lodge its *income tax return for the income year.

Subdiv 418-E inserted by No 21 of 2015, s 3 and Sch 6 item 2, applicable in relation to the 2015-16, 2016-17 and 2017-18 income years, but not in relation to any later income years. However, see amendments in Act No 72 of 2021 that extend the operation of Div 418 for the 2021-22 to 2024-25 years of income and note under Div 418 heading.

SECTION 418-115 Who may receive an exploration credit and what is the pool from which the credit may be issued

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418-115(1)
If *exploration credits are to be issued by an entity (the minerals explorer ) for an income year (the credit year ), work out each of the following by identifying whether scenario 1, 2 or 3 applies, and applying the rules for that scenario:

(a) whether the minerals explorer can issue an exploration credit to another entity in relation to *exploration investment made by the other entity in the minerals explorer in the credit year;

(b) whether the minerals explorer can issue an exploration credit to another entity in relation to exploration investment made by the other entity in the minerals explorer in the income year immediately preceding the credit year (the preceding year );

(c) the pool of exploration credits from which an exploration credit may be issued to another entity in relation to exploration investment made by the other entity in the minerals explorer in the credit year (this is called the issue pool for exploration investment made in the minerals explorer in the credit year);

(d) the pool of exploration credits from which an exploration credit may be issued to another entity in relation to exploration investment made by the other entity in the minerals explorer in the preceding year (this is called the issue pool for exploration investment made in the minerals explorer in the preceding year).

Scenario 1 - no unused allocation of exploration credits from the preceding year

418-115(2)
If there is no *unused allocation of exploration credits from the preceding year:

(a) *exploration credits can be issued to another entity in relation to *exploration investment made by the other entity in the minerals explorer in the credit year; and

(b) no exploration credits can be issued to another entity in relation to exploration investment made by the other entity in the minerals explorer in the preceding year.

418-115(3)
In this scenario:

(a) the issue pool for *exploration investment made in the minerals explorer in the credit year is equal to the total amount of *exploration credits created by the minerals explorer for the credit year; and

(b) the issue pool for exploration investment made in the minerals explorer in the preceding year is nil.

Scenario 2 - exploration credits for the credit year exceed unused allocation of exploration credits from the preceding year

418-115(4)
If the amount of the *exploration credits created by the minerals explorer for the credit year is more than the *unused allocation of exploration credits from the preceding year:

(a) exploration credits can be issued to another entity in relation to *exploration investment made by the other entity in the minerals explorer in the credit year; and

(b) exploration credits can be issued to another entity in relation to exploration investment made by the other entity in the minerals explorer in the preceding year.

418-115(5)
In this scenario:

(a) the issue pool for *exploration investment made in the minerals explorer in the credit year is equal to the difference between the *unused allocation of exploration credits from the preceding year and the total amount of *exploration credits created by the minerals explorer for the credit year; and

(b) the issue pool for exploration investment made in the minerals explorer in the preceding year is equal to the unused allocation of exploration credits from the preceding year.

418-115(6)
However, no *exploration credit can be issued to another entity in relation to *exploration investment made by the entity in the minerals explorer in the credit year unless the *issue pool for exploration investment in the preceding year is exhausted.

Scenario 3 - exploration credits for the credit year are equal to or less than the unused allocation of exploration credits from the preceding year

418-115(7)
If the amount of the *exploration credits created by the minerals explorer for the credit year is equal to or less than the *unused allocation of exploration credits from the preceding year:

(a) no exploration credits can be issued to another entity in relation to *exploration investment made by the entity in the minerals explorer in the credit year; and

(b) exploration credits can be issued to another entity in relation to exploration investment made by the other entity in the minerals explorer in the preceding year.

418-115(8)
In this scenario:

(a) the issue pool for *exploration investment made in the minerals explorer in the credit year is nil; and

(b) the issue pool for exploration investment made in the minerals explorer in the preceding year is equal to the total amount of *exploration credits created by the minerals explorer for the credit year.

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