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  • Greenfields minerals expenditure

    Note: EDI has finalised and is no longer accepting new participation forms, it has been replaced with the Junior Minerals Exploration Incentive.

    An entity's greenfields minerals expenditure for an income year will be the sum of the amounts that it can deduct in that income year for:

    • exploration and prospecting for minerals
    • the decline in value of a depreciating asset that is immediately deductible on the basis that it was first used for exploration or prospecting.

    Greenfields minerals expenditure does not include deductions related to:

    • the exploration for petroleum or oil shale
    • feasibility studies to evaluate the economic feasibility of mining a discovered resource.

    Exploration or prospecting for minerals for the purposes of the EDI must be in an area:

    • that is land within Australia
    • over which the entity holds a suitable mining, quarrying or prospecting right or interest
    • that has not been identified as containing a mineral resource that is at least inferred in a JORC Code report or other prescribed document.

    What is exploration or prospecting for minerals

    The phrase exploration or prospecting relies on the definition of exploration or prospecting in the Income Tax Assessment Act 1997.

    For the purposes of the EDI, exploration and prospecting will include:

    • the ordinary, natural meaning of exploration and prospecting
    • the other matters expressly identified in the definition, other than expenditure on feasibility studies to evaluate the economic feasibility of mining a discovered resource, as these activities are specifically excluded as greenfields minerals expenditure.

    Exploration or prospecting for minerals also includes activities that are so closely or directly linked with exploration or prospecting for minerals that they are reasonably considered to be part of it.

    Examples of exploration expenditure include:

    • environmental or heritage protection studies undertaken as preparation for or part of an exploration program
    • the costs of marking out an exploration area with posts, such as pegging
    • rent paid to a government on claims
    • fees, rates and charges or other expenses incurred for the maintenance of an exploration tenement.

    See also:

    Last modified: 30 Aug 2017QC 46390