This information will help determine what to do when you receive exploration credits and you are:
- an individual
- a corporate tax entity
- a trust or partnership
- a superannuation entity or self-managed superannuation fund
- a life insurance company.
If you have received exploration credits through a trust or partnership, you may be entitled to a tax offset or franking credit equal to your share of the exploration credits issued to the trust or partnership.
Your share of exploration credits must be the same as the share that you would be entitled to receive of an equivalent franked distribution to the trust or partnership from the same source.
You are only able to benefit from your share of exploration credits to the extent that you would have been entitled to a tax offset if the distribution of the exploration credit from the trust or partnership were instead a distribution of a hypothetical franked distribution that:
- was of the same amount as your share of the exploration credit
- was made by the same entity that issued the exploration credit, in the same circumstances for the same interests
- if you are a corporate tax entity, was made to you as if you were not a corporate tax entity.
See also:
- You and your shares 2017 – provides further information on entitlement to tax offsets on franked distributions from a trust or partnership.
Individual
If you are an Australian resident for the whole of the income year, you may be entitled to a refundable tax offset equivalent to the amount of exploration credits you received.
If you received exploration credits directly or indirectly from your shareholdings in a greenfields minerals explorer, you can claim your tax offset by completing the supplementary section of the individual tax return. The exploration credits are claimed under the 'other refundable tax offsets' item.
If you are also claiming tax offsets other than in relation to exploration credits for the income year, you will need to follow the instructions contained in the individuals supplementary tax return for the relevant income year.
Corporate tax entity
If you are an Australian resident taxpayer for the whole of the income year, you can recognise amounts of exploration credits received as a franking credit in your franking account and distribute these to your shareholders. You are not entitled to refundable tax offsets for exploration credits you receive.
Trusts or partnerships
Trusts and partnerships are generally unable to directly benefit from exploration credits however you may be able to distribute the credits to your beneficiaries or partners. If you are a trust or partnership, you must provide a distribution statement to your beneficiaries or partners advising of the exploration credits received and their share of the credits for the income year.
The share of the exploration credits must be the same as the share they would be entitled to receive in relation to an equivalent franked distribution to the trust or partnership from the same greenfields minerals explorer.
You must provide this distribution statement to your eligible beneficiaries or partners prior to lodging your tax return.
If you are a trust that is an investment body, then you must provide the distribution statement to your eligible beneficiaries before lodging your annual investment income report.
The distribution statement must contain the following:
- the trust or partnership name
- their share of the exploration credits under Subdivision 418-E of Income Tax Assessment Act 1997 (ITAA 1997) for the income year
- the name and ABN of the greenfields minerals explorer that issued the exploration credits to the trust or partnership
- a statement that the trust or partnership would, apart from subparagraphs 418-10(b)(ii) and (iii) of the ITAA 1997, have been entitled to a tax offset under Subdivision 418-B for the income year the exploration credit was issued by the greenfields minerals explorer.
If you are distributing exploration credits from more than one greenfields minerals explorer, you must ensure the statement you provide separately itemises each greenfields minerals explorer.
If you are a trustee that is liable to tax under subsections 98(1), 98(2), 99(2) or 99(3) of the Income Tax Assessment Act 1936, you may be entitled to a tax offset for the exploration credits received that are not distributed to your beneficiaries.
A superannuation entity or self-managed superannuation fund
You are entitled to a refundable tax offset where you were an Australian resident for the whole income year and received exploration credits.
The amount of your tax offset is the value of the exploration credits you received during the income year. You should include that amount at the exploration credits tax offset item in your tax return.
Life insurance company
You are eligible to receive refundable tax offsets for exploration credits received from investments you hold on behalf of your policy-holders. If you are an Australian resident for the whole of the income year and received exploration credits on shares you hold on behalf of your policy holders, you must include the amount at the refundable tax offsets item in the calculation statement in the company tax return.
What you need to do if you receive exploration credits from a greenfields minerals explorer.