MRRT and Carbon Tax: Issues for financiers and funds presentation

Published on 13 Feb 13 by NATIONAL DIVISION, THE TAX INSTITUTE

The MRRT will have a significant impact on pricing of projects and security positions. Financiers and funds will need to be aware of:??

• Core mining project interest identification provisions, particularly in the case of joint venture arrangements, passive JV investors, farm-in arrangements andofftake arrangements
• Concessions that certain miners may claim that have the impact of eliminating allstarting base value and MRRT deductions, impacting on value for funding and security enforcement
• Transfer of MRRT loss provisions and impact on project valuation
• Treatment of expenses, in particular, financing expenses, lease expenditure, hire purchase fees, hedging expenses and security deposits
• Ensuring tax sharing agreements are appropriately updated to remove the risk of joint and several liability for tax liability across entities within a MRRT consolidated group
• Issues for financing M&A activity.

Financiers and funds will also need to consider the impact of carbon pricing on projects and investment, particularly:

• Identifying entities that will be required to surrender emissions units in respect of emitting activity, including through operator and control provisions
• Understanding liability criteria and impacts of failure to comply
• Understanding carbon price path
• Anticipating development of derivatives following the fixed price period.

Author profile

Teresa Dyson

Teresa Dyson is a non-executive director of Seven West Media Ltd, Genex Power Ltd, entyr Ltd, Energy Queensland, Gold Coast Hospital & Health Service, Shine Justice Ltd, Brighter Super and the Foundation for Alcohol Research and Education. Teresa has also served as a member of the Foreign Investment Review Board and the Takeovers Panel and is a former chair of the Board of Taxation. Teresa is an independent member of the Australian Taxation Office Audit & Risk Committee. Teresa has over 25 years legal experience advising the private sector and governments on complex infrastructure, mergers and acquisitions, finance transactions and social infrastructure. She was formerly a partner of Ashurst and Deloitte - Current at 27 October 2023

More by Teresa DYSON

• The Board of Tax Review of the debt/equity rules paper - 18-March-2015
• Financial services acquisitions and disposals paper - 18-February-2015
• Review of the debt/equity tax rules paper - 19-February-2014
• MRRT and Carbon Tax: Issues for financiers and funds paper - 13-February-2013
• Capital management buybacks paper - 14-March-2012
• Infrastructure financing paper - 15-February-2012
• Debt or equity paper - 24-October-2011
• Getting to know the resource taxes paper - 06-October-2011
• Tax exemptions and concessions for mutuals, charities and other non-profit bodies paper - 04-March-2010
• Tax indemnities on sale of entities paper - 14-March-2008
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• Intellectual Property and Taxation paper - 23-November-2007

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