The attached exposure draft legislation would amend the income tax law to implement the Government’s election commitment to provide an Exploration Development Incentive. Accompanying this draft is explanatory material to explain the operation of the proposed law.
The proposed Exploration Development Incentive would be available to Australian-resident investors in small mineral exploration companies. Under the incentive, investors may be entitled to the EDI tax offset or additional franking credits where the company in which they are a member issues them an exploration credit.
Companies may issue exploration credits to their shareholders up to a capped amount in an income year, with the cap for a company based on the company’s exploration expenditure and tax loss for the relevant income year, adjusted by a modulation factor to ensure that the total value of credits provided in respect of an income year does not exceed $25 million in respect of 2014-15, $35 million for 2015-16 and $40 million for 2016-17.