These Rulings, issued on Wed 18.4.2012, set out the Commissioner’s views on the application of the income tax and GST provisions upon entry into specified farm-out arrangements.
MT 2012/1 concerns immediate transfer farm-out arrangements and MT 2012/2 deals with deferred transfer farm-out arrangements.
- Under an immediate transfer farm-out arrangement, an obligation to transfer a percentage interest in a mining tenement from a farmor (the owner of the interest) to a farmee (another party) arises for the farmor upon entry into the agreement.
- Under a deferred transfer farm-out arrangement, the terms of the arrangement specify that the transfer of an interest in the mining tenement from the farmor to the farmee occurs only after the farmee has met all of the exploration commitments and any payment requirements to earn that interest within a specified period of time.
The Rulings consider the characterisation of the arrangement, the application of the UCA provisions, the CGT implications, income and deduction provisions and the GST provisions.
The Rulings were previously released as Draft Miscellaneous Taxation Rulings MT 2011/D1 and MT 2011/D2, respectively.
DATE OF EFFECT: MT 2012/1 applies to an immediate transfer farm-out arrangement entered into after 27 July 2011 and MT 2012/2 applies a deferred transfer farm-out arrangement entered into after 24 August 2011 (ie the issue dates of the Drafts).
[LTN 73, 18/4]