The Minerals Council of Australia (MCA) says the federal government’s revised capital gains tax (CGT) concession for innovative businesses fails to provide equivalent relief for junior mineral explorers.
Broader CGT reforms taking effect from 1 July 2027 will replace the existing 50% discount for individuals, trusts, and partnerships with cost-base indexation, alongside a 30% minimum tax on capital gains. Under draft legislation released for consultation, eligible early-stage investors would retain access to a 50% discount on gains from qualifying innovative businesses.
The Australian Government has broadened the proposed Innovative Business CGT Concession by extending the company eligibility period to 15 years, reducing the minimum investment period from five to three years, and removing a proposed lifetime cap.
However, the draft does not include a specific eligibility pathway for mineral exploration companies. Qualifying businesses generally need annual turnover below $50 million, an Australian operating base, and activities that satisfy innovation and predominant-activity tests. Companies incorporated from 1 July 2027 must also be unlisted when registering for the concession.
MCA chief executive officer Tania Constable says junior exploration companies face risks comparable with start-ups but remain exposed to the wider CGT changes unless their activities meet the innovation requirements.
“Investment in eligible early-stage exploration is similar to investment in venture capital and start-ups, so should get comparable CGT treatment,” Constable says.
The council estimates the changes could reduce an investor’s after-tax return from a successful junior exploration investment by at least 19%. As previously reported by Mining.com.au, its analysis modelled an investor on a 37% marginal tax rate who invested $10,000, held the shares for five years, received no income, and later recorded a $20,000 capital gain.
The calculation produced an after-tax return of about $16,300 under the existing discount, compared with $13,064 under the new settings.
The council also says greenfields spending has declined from about one-third of Australia’s total exploration expenditure in recent years to one-quarter during the latest financial year.
Consultation on the draft concession closes on 28 September 2026.
The Minerals Council of Australia represents the country’s mineral exploration, mining, and processing industries.
Write to France Pinzon at Mining.com.au
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