Accounting for MRRT

There are several special circumstances which taxpayers may need to be aware of when accounting for MRRT.

Accounting period

For MRRT purposes, the accounting period will generally be a financial year - 1 July to 30 June.

Broadly, this is referred to as an MRRT year.

However, where taxpayers use an accounting period for income tax other than the standard 1 July to 30 June financial year, they must use that substituted accounting period (SAP) as their MRRT year.

Where taxpayers change from one accounting period to another for the purposes of the income tax law (for example, moving from a standard financial year to a SAP, or changing their SAP) special rules apply for MRRT to deal with overlaps or gaps between the old and new accounting periods.

The application of these special rules may result in a transitional MRRT year which is longer or shorter than 12 months.

As a transitional MRRT year arising through the application of the special rules can be longer or shorter than 12 months, MRRT threshold amounts that are based on a 12 month period (such as the low-profit offset, alternative valuation method and simplified MRRT method) are proportionately adjusted to reflect the length of a transitional year.

In addition, uplift factors for the year following a transitional MRRT year (such as in relation to an unused mining loss carried forward for use in the next year) are also proportionately adjusted to reflect the number of days in the transitional year.

All taxpayers start their first MRRT year on 1 July 2012, the date from which the MRRT first applies. Taxpayers using a SAP for income tax, where the accounting period begins after 1 July 2011, will have a short first MRRT year. That is, their first MRRT year will start on 1 July 2012 and end at the end of their accounting period.