Income Tax Assessment Act 1997
Generally, you are entitled to a tax offset for an income year for exploration credits issued to you for the income year.
A greenfields minerals explorer can create exploration credits for an income year. Before creating exploration credits, the explorer must obtain an allocation of exploration credits from the Commissioner for the year. Exploration credits cannot be created for the 2025-26 income year or later income years.
The exploration credits created for an income year cannot exceed an amount based on the explorer ' s greenfields minerals expenditure or tax loss for the year. If the explorer ' s exploration credits allocation for the year is smaller than that amount, the amount of exploration credits that the explorer can create will be reduced to sit within the allocation. However, any unused allocation of exploration credits from the preceding year generally would be carried over and so would increase the amount of exploration credits that the explorer can create.
An exploration credit created by a greenfields minerals explorer can be issued to you if you have invested in the explorer. While the tax offset you receive for the exploration credit issued to you for an income year will apply to that income year, generally the investment that gives rise to that offset may have been made in that or the preceding income year.
There are rules to ensure that exploration credits are not streamed to some investors rather than others. There are also rules to ensure that the total of the exploration credits you receive because of an investment (whether those credits are issued to you for the year in which you invest or the subsequent year) do not exceed the corporate tax that might be paid by the greenfields minerals explorer on that investment.
The explorer is liable to pay excess exploration credit tax if the explorer issues exploration credits in breach of these rules.
There is a cap on total allocations made by the Commissioner for each income year, but if part of the cap from the preceding year is unallocated it generally will be carried over. Allocations are made in the order in which applications for an allocation are made.
If an exploration credit is issued to a corporate tax entity, it will give rise to a franking credit (rather than a tax offset).
Excess exploration credit tax is imposed by the Excess Exploration Credit Tax Act 2015 , and the amount of the tax is set out in that Act.