Hi everyone,
On the weekend several new tax measures were announced by the government. Among those was the 40% resources tax effective from July 1 2012.
Is this a totally new tax?
What implications does this have for property investing in mining towns?
Any thoughts would be great.
Andrew Stow
itsandrew
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The new Super Tax is based on Profit and not like the old days when they were Taxed on Royalties.
Cant see any long term effect to property investing in these areas whatsover.
Richard Taylor | Australia's leading private lender
Hi Andrew,
I think the impact of the tax changes on property investors is minimal, but its impact on the Australian economy as a whole could be quite drastic, depending on how the mining industry react to these changes
"The introduction of a mining tax will have disastrous consequences on the operations and viability of many mining companies that are still reeling and gradually recovering from the impacts of the global financial crisis," AMEC chief executive Simon Bennison said.
Personally, I am against the 40% resource tax – As the saying goes 'You shouldn't kill the goose, that lays the golden eggs', and if the tax goes ahead, companies and investors may seek to do business elsewhere
Hope that helps,
Kong
This tax will shelf more projects as there will be less profit for mining companies to make. If shareholders aren’t getting dividends that there after it will force companies to mine overseas where there’s more net profit to be made. It will also result in pushing resource prices higher and countries like China will buy from supliers like brazil who might be cheaper.
This will result in towns not experiencing growth in population which will in turn put downward pressure on rents and prices. This will kill the next mining boom.
It may very well create short term urgency by miners to get the most out of the ground before the tax is put into action. Resulting in a short term accomodation crisis in some areas?? = higher rental returns??
Cheers
MikeyThanks all for the replies.
The reason I initially asked was because I was looking at investing in some CF+ properties and had mining towns on the radar.
I know that there are not only miners and exec's but also major infrastructure projects. I have all of a sudden become quite nervous about the strategy because of implications that it may have on the size of the workforce and the viable lifespan of the mines and its infrastructure projects.
For me it's a matter of 'watch this space' as it seems that it will be a major issue in the upcoming election. I watched the budget reply tonight and Tony Abbot said that he would not only oppose the super tax but would also rescind it if he was elected. The flipside is that kevin Rudd is being pretty cagey on the details and definitions and it may not be quite as dramatic as he had once envisged it to be. Obviously time will tell.
Thanks again to everyone for their contributions.
Regards,
Andrew
itsandrew
Go as far as you can see and you will see further.
itsandrew wrote:Thanks all for the replies.The reason I initially asked was because I was looking at investing in some CF+ properties and had mining towns on the radar.
I know that there are not only miners and exec's but also major infrastructure projects. I have all of a sudden become quite nervous about the strategy because of implications that it may have on the size of the workforce and the viable lifespan of the mines and its infrastructure projects.
For me it's a matter of 'watch this space' as it seems that it will be a major issue in the upcoming election. I watched the budget reply tonight and Tony Abbot said that he would not only oppose the super tax but would also rescind it if he was elected. The flipside is that kevin Rudd is being pretty cagey on the details and definitions and it may not be quite as dramatic as he had once envisged it to be. Obviously time will tell.
Thanks again to everyone for their contributions.
Regards,
Andrew
Hi Andrew
I think the news may temporarily effect mining towns but I don't believe it will be dramatic, some investors may become nervous and not be as eager to jump in, there may be some who decide to sell up this could cause demand to drop off and and prices to fall back for a short period.However, I don't believe this tax will go ahead in its current form, this tax will effect everyone in Australia and big business are now also backing mining companies. Why would you want to shoot the goose that lays the gold eggs.
Marisa
Will kill the next project… heard STO(Santos) is negoatiating the LNG project
rudd’s lost the plot… The tax might work if he re-invested some the money in public owned infrastructure in the bowen or wa but to use it to pay off insulation and handouts is like having kindergarten students running the canteen
Hi again,
Thanks to e1 for their thoughts.
Marissa – I saw Martin Ferguson being a little more concilliatory than Rudd or Gillard about the makeup of the 'Super Tax' (ie about thresholds and other 'details'). I think this is a bit of 'good' cop, bad cop but I really dont know. I think that Rudd has too much invested politically in this tax to make many changes but if there is a massive backlash he might change the makeup of it. How do you think it might change?
Andrew
itsandrew
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Hi again,
Further to my previous comments I was watching the 7.30 report last night and Kerry O'Brien was interviewing Lindsay Tanner. The 40% Super Tax came up again and (rhetorically at least) he was claiming there was room for negotiation. The line of argument went something like 'if we released a discussion paper about the tax prior to formulating policy we would have had the same response from the mining companies. So we set the policy and are now negotiating the details – it's all the same!'
Here's the link: http://www.abc.net.au/7.30/ "Tanner denies mining tax ambush"
It seems like the Governement are starting to try and sound concilliatory at the same time as sounding hard on 'greedy' mining companies. The message is starting to sound confusing. The question for me is if they are back pedaling or spinning.
I suppose it's even harder now to take a view on implications for property until it is cleared up (or muddied) further.
Andrew
itsandrew
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I just got back from the Central Qld coal mining area and most managers i spoke to said they are just pleased that the Emissions Trading Scheme is finished with.
They also seem pleased that there are alot of incentives for the new mines that are currently being developed.
Most stated that the end result will be in the detail, and that in the mean time they will fight to get the best deals they can for their share holders.
Over all they believe that it will simplify and condense what is currently a very messy taxation system for them.
Well we officially have a new PM. I wonder whether Julia Gillard will shift from the hard line Kevin Rudd took with his Super Tax (or the backflip on the TES for that matter). I know Gillard made a lot of decision behind the scenes but I think she was pretty quiet on this one – at least in public.
A sidelight on Lateline last night was AWU National Secretary Paul Howes strongly holding the line on the super tax (who was one of the major non-parliamentary supporters of Gillard tht delivered Votes in the Caucus). I think it will be interesting to see what happens next beacause the super tax decimated labor support in Qld and WA. A lot more to play out and a holding pattern on mining town properties?
Andrew
itsandrew
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Quick update. Julia Gillard has already held out an olive branch to the mining industry. She has put mining advertising on hold so she seems to have a new attitude to the mining tax.
Andrew
itsandrew
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I Hope Julia is able to manage the country's finances and planning better than she has managed the BER (Bloody Economically Rats**t) As a teacher and a parent i cannot believe the phenomenal wastage of money that this has been. I also believe that the companies that have been awarded these contracts should be tried for fraud. They quote on a certain design and building size then produce soemthing half the size and in a layout that is not practical or usable for it's intended purpose. Their fees are astronimical and the BER has done little if anything to support local builders. Additionally, private and catholic schools that were allowed to seek their own tenders for their building works are using local builders and are getting far more for the $$ and in a shorter time frame.
This BER money could have achieved so much more if it had been managed better, a similair, yet not yet fatal, result as that of the well intentioned, yet poorly managed insulation scheme.
What astounds me is that Gillard was part of the 'foursome' that pushed this 'Super Tax' along with Rudd, Swann (new deputy, be scared, be very scared:) and not quite sure of the other persons name. She starts to spout about 'didn't like the direction the party was going in' ect all innocent, HELLO! rant over.
A friend has just put one of her houses for sale in Hedland and the REA was saying over the last 4 weeks it has gone extremely quiet. It's been over two weeks and no enquiries. Another property was up for lease renewal and she asked if she should put up the rent and he said no that he wouldn't be surprised if they asked for a reduction. They didn't and signed a new lease but he said he has had a few break leases too.
Well, out – super profits tax, in – mineral resource rent tax. A week is a long time in politics! Sure, the devil's still in the detail but there are already some mining projects being taken off hold. It seems that some sort of consensus has been reached but the Policy Transition Group has a lot to do. Don Arguse is a huge inclusion to the TPG for the mining lobby but he'll have his work cut out for him.
As well as the tax details there is still an oppposition ready to block legistlation and to rescind the tax if they win the upcoming election.
My gut feel though is that there is now enough stability in the mining tax that it will be business as usual and any potential negative impact on jobs, housing and confidence have been waylaid.
Andrew
itsandrew
Go as far as you can see and you will see further.
I think the damage has been done. Everyone in this country is extremely nervous about the economy and we are starting to get the brunt of it in retail. It is a very nasty time to be a retailer and the lack of consumer spending will soon see us into yet another Labor recession. J-LARD has put the usual political spin on the tax malarky by renaming an unpopular tax with a pretty new word or two. A rose by any other name….. or in this case a tax is still a tax. But this is exactly how KRUDD and J-LARD worked the unpopular work choices in their favour.
I would hope that the silent majority would see through the fact that this is the same spin different bucket but you never know when it comes to an election. Personally I thought the maiden speech reeked, work harder for the Commandant and you will be rewarded like the ants you are! We salute you J-LARD and your coup, may your reign of economic terror be of short duration.
D
DWolfe | www.homestagers.com.au
http://www.homestagers.com.au
Email MeWell Dwolfe, why don't you let us know what your really feeling ?
Do you honestly feel the property market will be effected by a Tax that will now only affect relatively few companies?
Your pro-conservative rants are tiresome and lack substance.
Actually the PM's name is Julia….get used to it because she will be around for a while.
A female, atheist, intelligent, ranga running this great country. Love it !Brutal!
No I don’t think the property market will be affected by this tax. The UNCERTAINTY has affected the country. The fact that anyone in charge does not seem to know what is going on on how much of it is going on is tiresome. The problem I have is that the same govt is in charge and every one loves it. Everyone seemed to hate Kevin Rudd soooo much and now that Julia Gillard (happy?) is in charge everything has changed. Nothing has changed, it is the same people!
I am happy she is a female. I am not happy with the fact that no one in govt seems to be able to run a bath! The parties change and everything is still crap. John Howard was crap too! He wanted to bring in nuclear power (again) talk about living in the 50’s. Kevin Rudd was the saviour of the country until everyone got sick of him. Will the same happen to Julia Gillard?
And since when does a persons religion or lack of mean anything? Yes she is a red head….and? Let’s just trot out every stereotype while we are here. All I want in a political leader is someone who actually knows what’s going on, doesn’t make excuses, and does not lie through their teeth.
Thank Goodness we live in a free country or right now I would be in a small dark cell for speaking my mind, which is my right as well as yours.
Just for you Lalibella I will make sure I stick to helping people with property and wont make any more political comment.
D
DWolfe | www.homestagers.com.au
http://www.homestagers.com.au
Email Me
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