Exploration Development Incentive
November 2016 - Update
For the 2016/17 income year the Exploration Development Incentive has a modulation of one. AMEC’s statement can be found here.
The Exploration Development Incentive (EDI) legislation passed through Parliament on 3 March 2015 with bipartisan support becoming effective from 1 July 2014.
EDI Modulation Factor - Applications for the first year closed on 30 September 2015 and the modulation factor was announced on 27 November 2015. For the 2015-16 income year, the EDI modulation factor is 1. For full details please view the Income Tax Assessment Act 1997 – Exploration Development Incentive Modulation Factor – Declaration Instrument (No. 1) 2015 online here.
AMEC held EDI road shows in Sydney, Brisbane and Perth for members and the EDI was the focus of a panel discussion at the AMEC Convention 2015 in Perth.
AMEC has worked closely with the ATO and Treasury to develop useful guidance material which is now available online at: www.ato.gov.au/Business/Exploration-Development-Incentive
The Tax and Superannuation Laws Amendment (2014 Measures No. 7) Bill 2014 is also available online. (Refer schedule 6 for information pertaining to the EDI).
About the EDI
For more than a decade, AMEC has been the leading advocate for an exploration tax credit system and was instrumental in the Government adopting the EDI.
Given the long lead time from discovery to a producing mine, investment in greenfields exploration is essential.
The EDI will enable eligible companies to pass on to their Australian resident shareholders a proportion of eligible exploration expenditure in the form of a tax credit. This expenditure would have previously been held as a 'loss' in the company's Balance Sheet until such time as it was able to claim that loss as a tax deduction.
The 2014/15 Federal Budget provides an allocation of $100 million over the next three years for the EDI. This represents approximately $350 million in eligible exploration expenditure and will create about $1 billion in subsequent economic activity.