Treasury in dark on finer points of miners' accounts
Speaking at a Senate inquiry into the mining tax, Dr Parkinson said while his department had a fairly clear view of what was happening to the Australian dollar and commodity markets, Treasury was unable to know how companies were applying their "starting base deduction" when calculating their obligations under the tax.
The starting base is the difference between the book value of a mining company's asset, and the market value the miner judges the asset to be worth.
Companies such as BHP Billiton and Rio Tinto have been using this number as a deduction to their mining tax payments, and must apply it evenly over the life of the mine to a maximum of 25 years.
Dr Parkinson said the size of that "starting base allowance" and the speed at which it was being written off were the crucial details his department could not see, and were likely to be the reason Treasury's revenue predictions had been so wide of the mark with regard to the mining tax.
"It is fair to say we have been sufficiently concerned about our ability to work out what's going on," he said.
"We won't be able to come to grips with what has happened here until we can speak with industry."
But Dr Parkinson said he had not asked the mining companies for clarification of those amounts and would instead wait for them to file their tax returns, which could be three months to a year away.
He defended that stance by saying it would be abnormal to ask companies for tax information before they submitted their annual tax returns.
Iron ore and coal miners have paid $126 million in gross mining tax payments so far, well short of the $2 billion expected by the Treasury this financial year.
Tax Office commissioner Stephanie Martin said the payments made to date were only estimates by the mining companies, and the Tax Office could impose a penalty if they ultimately judged the companies had underpaid once full-year tax returns were lodged.
On Wednesday, the inquiry was addressed by economist Richard Denniss from Canberra's Australia Institute. He called for the tax to be widened to include all minerals, including gold, copper and uranium.
"We should simplify the tax by broadening it ... there is no reason to have excluded gold and we would be collecting a lot more revenue now if gold was included," he said.
The managing director of gold producer Northern Star Resources, Bill Beament, said perceptions that gold companies were still enjoying record prices for their products were several years out of date.
"We are not dealing with record high gold prices at the moment ... keep in mind costs are very high as well, there's not a lot of gold miners who make a lot of money at the moment," he said.
"The gold industry is predominantly owned by institutions and superannuation money and pension money ... that would be just another tax on the superannuation of working families."
Rio Tinto declined to comment on reports it had hired Deutsche Bank to help sell stakes in two of its struggling thermal coal mines.
Frequently Asked Questions about this Article…
The starting base is the difference between a mining asset's book value and the market value the miner assigns to that asset. Companies can use that number as a deduction against their mining tax, spreading the allowance evenly over the life of the mine for up to 25 years, which can reduce their immediate tax bills.
Dr Parkinson said Treasury can see commodity markets and the dollar, but cannot see how companies are calculating or applying the starting base allowance (its size or the speed it's written off). That lack of visibility makes it hard for Treasury to accurately predict mining tax revenue.
Yes. The article says companies such as BHP Billiton and Rio Tinto have been using the starting base number as a deduction against their mining tax obligations, applying it across the life of their mines as allowed.
No. According to Dr Parkinson, he had not asked companies for clarification and said Treasury would wait for companies to file their tax returns, arguing it would be abnormal to request tax information before annual returns are submitted.
Iron ore and coal miners have paid $126 million in gross mining tax so far, which is well short of the $2 billion Treasury expected for the financial year. The payments so far are company estimates and may be adjusted when full returns are lodged.
Yes. Tax Office commissioner Stephanie Martin said the payments made to date are estimates, and the Tax Office could impose a penalty if it later judges companies underpaid when full-year tax returns are lodged.
Economist Richard Denniss from the Australia Institute recommended widening the tax to include all minerals — including gold, copper and uranium — to simplify the tax and potentially collect more revenue, noting there was no reason gold had been excluded.
Bill Beament said perceptions that gold companies are enjoying record prices are out of date, costs are high, and many gold miners aren't making a lot of money. He also warned that taxing gold would effectively be another tax on superannuation and pension funds, since the industry is largely owned by institutional and superannuation money.
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