A mining company has a future obligation to rehabilitate a mine site after mining ceases. 2. The mining company enters into an arrangement with a second entity (which may be an associate or otherwise related entity) and pays that second entity to carry out the mine site rehabilitation at a future time. 3. The mining company seeks to claim an immediate income tax deduction for the payment. 4. The second entity does not return the full payment as assessable income on revenue account for Australian income tax purposes in the income year of receipt. 5. Alternatively, an intermediary may be used and the payment channelled through the intermediary to a related party or associate. 6. The second entity and any intermediary are situated overseas, frequently in a tax haven.
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