Carbon and mining taxes go live

The end of the financial year has brought into effect two major taxes, the carbon tax and the mining tax, both of which became operational today.

According to the Australian Industry Group's survey of carbon cost burden, 42 per cent of businesses in the manufacturing, services and construction sectors would raise their selling prices in response to today's implementation of the carbon tax. The Ai Group found that communications services businesses are the most likely to pass on cost increases to their customers (82 per cent), while finance, insurance, accommodation, cafe and restaurant businesses are less likely to do so.

"Plans to recover cost increases appear to be influenced by two broad considerations: the extent to which the business is trade exposed and the current market situation facing the business," explained Ai Group CEO Innes Willox.

"For instance, although building and construction is not trade exposed, the deep slump facing large parts of this industry is likely to inhibit the ability to pass through costs."

The mining tax, or the Mineral Resource Rent Tax, is another concern for many businesses, although according to media reports, its effect remains uncertain as a result of volatile commodity prices and the Australian dollar.

The 22.5 per cent MRRT affects miners exploring, producing or preparing for production in iron ore and coal, in particular smaller businesses that have spent up to half a million dollars each preparing for the tax, as stated by the Australian Financial Review.

However, the ATO provides a number of tax offsets to businesses earning under $125 million per year, but this applies only to group mining profits and affects only the tax paid for that financial year. Businesses will be able to recoup part of their MRRT liability, while businesses earning under $75 million will not have to pay any tax as the offset is the sum of the MRRT liabilities for each of its mining project interests for that year.

For more information, view the ATO page.

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