The Minerals Resource Rent Tax (MRRT) is a tax on profits generated from the extraction of non-renewable resources in Australia. It passed the Senate on March 19.
It is Labor's replacement for the proposed Resource Super Profit Tax (RSPT).
The government's MRRT will apply to new and existing iron ore and coal projects in Australia, at a rate of 30 per cent on the taxable profit of a project, from 1 July 2012.
The federal government says around 320 companies will potentially be affected by the tax.
Key features of the tax
- The tax will be levied on 30 per cent of the taxable profit of a project.
- The tax will only apply to iron ore and coal projects.
- Projects will be eligible for a 25 per cent extraction allowance, which reduces the taxable profits subject to the rent tax to 22.5 per cent.
- The existing Petroleum Resource Rent tax (PRRT) will be extended to all onshore and offshore oil and gas projects.
-The MRRT will fund a cut in company tax to 29 per cent. Small businesses will be the first to receive the tax cut in 2012-2013.
-The MRRT is expected to bring $10.5 billion in revenue in its first two years.
-The government says such revenue will be used to cut taxes for Australia's 2.7 million small businesses and to build needed infrastructure in regional communities -- funding a $6 billion Regional Infrastructure Fund.
-The government also says under the tax, the average Australian worker's super will be increased from a minimum 9 per cent of wages to a minimum 12 per cent of wages.
Opposition to the tax
If elected, Tony Abbott has said the Liberal Party will overturn the MRRT.
Fortescue Metals Group, Xstrata, Hancock Prospecting and mining lobby groups have also opposed the tax.
Western Australian mining magnate Andrew Forrest has stated that the tax 'will reduce investment in Australia', while Australia's richest person, Gina Rinehart, believes it will drive away billions of dollars of investment.
Supporters of the tax
The Greens conditionally supported the MRRT, saying they wanted the tax on coal and iron ore to be extended to gold and uranium.
The MRRT has also received support from the Australian Council of Trade Unions and the Construction, Forestry, Mining and Energy Union.
Unlike the Resource Super Profit Tax (RSPT), multinational mining companies BHP Billiton and Rio Tinto Group have not publicly opposed the MRRT.
Under Kevin Rudd's Labor government, the RSPT was to be levied at 40 per cent and applied to all extractive industry including gold, nickel and uranium mining as well as sand and quarrying activities.
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