In summary

The Department of Industry, Science, Energy and Resources has in July 2020 released its first annual impact assessment of the Junior Minerals Exploration Incentive (JMEI) which commenced in the 2017-18 income year. The impact assessment provides insight to the number of successful applicants, their identity and credits received.

The credits were capped at $15 million for the 2017-18 income year with $8.5 million of those credits being allocated amongst the 23 successful companies. The impact assessment also listed the types of entities that were distributed JMEI exploration credits from investment bodies, being mostly individuals and companies.

In detail

Overview of the Incentive

The JMEI commenced in March 2018 and aims to provide a tax incentive to attract and increase the amount of new investment to junior minerals exploration companies undertaking greenfields minerals exploration in Australia. The JMEI allows junior minerals exploration companies to “convert a portion of their tax losses into franking credits or a refundable tax offset, depending on the investor profile” for investors in newly issued shares. The JMEI will provide a total of $100 million credits over a four year period from 2017-18, subject to an annual cap.

Impact Assessment

In the 2017-18 income year, available exploration credits were capped at $15 million. 25 companies submitted applications and 23 of those companies were successful, receiving credits to the value of $8,467,931. A list of the 23 successful applicants and the credits they received in the 2017-18 income year is provided. $5 million of the unused exploration credits for the income year have been added to the cap for the 2020-21 year.

The assessment also discloses details of the types of entities that received the JMEI exploration credits from investment bodies. Based on Annual Investment Income Reports (AIIR) lodged with the ATO by eight investment bodies, credits were distributed to the following payees:

Entity type $ million
Company 1.1
Individual 1.3
Superannuation 0.5
Trust 0.3
Grand total 3.2

Nine of these payees identified themselves as non-Australian resident entities and received a grand sum of $14,042.

Submissions

As required under the legislation, the impact assessment calls for consultation on the regime, with submissions due on 27 July 2020.

If you require additional information, please contact Narelle McBride, Partner, Greenwoods & Herbert Smith Freehills or your usual Greenwoods & Herbert Smith Freehills contact.