A public ruling, when issued, is the published view of the Commissioner of State Revenue (the Commissioner) on the particular topic to which it relates. It therefore replaces and overrides any existing private rulings, memoranda, manuals and advice provided by the Commissioner in respect of the issue(s) it addresses.
Where a change in legislation or case law (the law) affects the content of a public ruling, the change in the law overrides the public ruling—that is, the Commissioner will determine the tax liability or eligibility for a concession, grant or exemption, as the case may be, in accordance with the law.
7 + ((AP – 100) ÷ AP × 5.5)
7 + ((AP – 100) ÷ AP × 5.5) + ((AP – 150) ÷ AP × 2.5)
7 + ((AP – 100) ÷ AP × 5.5) + ((AP – 150) ÷ AP × 2.5) + ((AP – 175) ÷ AP × 5)
7 + ((AP – 100) ÷ AP × 5.5) + ((AP – 150) ÷ AP × 2.5) + ((AP – 175) ÷ AP × 5) + ((AP – 225) ÷ AP × 10)
7 + ((AP – 100) ÷ AP × 5.5) + ((AP – 150) ÷ AP × 2.5) + ((AP – 175) ÷ AP × 5) + ((AP – 225) ÷ AP × 10) + ((AP – 300) ÷ AP × 10)
Average price per tonne for period | Rate | |
---|---|---|
Up to and including $100 | 7% | |
Over $100 and up to and including $150 | First $100
Balance |
7%
12.5% |
More than $150 and up to and including $175 | First $100
Next $50 Balance |
7%
12.5% 15% |
More than $175 and up to and including $225 | First $100
Next $50 Next $25 Balance |
7%
12.5% 15% 20% |
More than $225 and up to and including $300 | First $100
Next $50 Next $25 Next $50 Balance |
7%
12.5% 15% 20% 30% |
More than $300 | First $100
Next $50 Next $25 Next $50 Next $75 Balance |
7%
12.5% 15% 20% 30% 40% |
Example 1
XYZ Pty Ltd conducts 2 separate coal mining operations—ABC Mine and DEF Mine.
During a return period, XYZ Pty Ltd enters into the following transactions in relation to coal mined from its operations.
Operation | Domestic/ Export sale |
Quantity (dry metric tonnes) |
Total amount billed to third parties |
Freight and insurance |
Exchange rate (A$1.00) |
ABC Mine | Export | 50,000 | US$14,720,000 | US$320,000 | US$0.90 |
DEF Mine | Export | 20,000 | US$3,200,000 | US$100,000 | US$0.85 |
DEF Mine | Domestic | 10,000 | A$1,100,000 | n/a | n/a |
A gross value royalty decision applies to the export coal sold from the DEF Mine. Under that decision, the Commissioner has determined that the gross value per tonne is US$175.
The royalty rates applying to the coal from each operation for the return period are calculated as follows.
ABC Mine
The net revenue billed for the return period is A$16,000,000 (i.e. US$14,720,000 – US$320,000 = US$14,400,000, converted into Australian dollars as at the bill of lading date).
The total invoiced payable tonnes for the return period is 50,000.
The average price per tonne for the return period is therefore A$320 (i.e. A$16,000,000 ÷ 50,000).
The royalty rate for export coal for the return period is calculated as follows:
= 7 + ((320 − 100) ÷ 320 × 5.5) + ((320 − 150) ÷ 320 × 2.5) + ((320 − 175) ÷ 320 × 5) + ((320 − 225) ÷ 320 × 10) + ((320 − 300) ÷ 320 × 10)
= 7 + (220 ÷ 320 × 5.5) + (170 ÷ 320 × 2.5) + (145 ÷ 320 × 5) + (95 ÷ 320 × 10) + (20 ÷ 320 × 10)
= 7 + 3.78125 + 1.328125 + 2.265625 + 2.96875 + 0.625
= 17.96% (i.e. 17.96875 rounded down to 2 decimal places and expressed as a percentage)
DEF Mine
The royalty rate must be worked out separately for export and domestic coal.
For export coal:
= 7 + ((200 – 100) ÷ 200 × 5.5) + ((200 – 150) ÷ 200 × 2.5) + ((200 – 175) ÷ 200 × 5)
= 7 + (100 ÷ 200 × 5.5) + (50 ÷ 200 × 2.5) + (25 ÷ 200 × 5)
= 7 + 2.75 + 0.625 + 0.625
= 11.00%
For domestic coal:
= 7 + ((110 – 100) ÷ 110 × 5.5)
= 7 + (10 ÷ 110 × 5.5)
= 7 + 0.5
= 7.5%
Calculation
Gross value
Scenario | Description | Gross value |
---|---|---|
1 |
For example:
|
The sum of:
|
2 |
For example, Company A mines and sells coal to Company B (an arms-length third party) in exchange for a cash payment and a transfer of some of Company B’s port entitlements to Company A. |
The sum of:
|
3 |
|
The sum of:
|
4 |
|
The sum of:
|
5 | None of the above scenarios apply. | The sum of:
|
Example 2
During a return period, XYZ sells a total of 5,000 tonnes of coal to an unrelated party, GHI Pty Ltd (GHI), for A$110 a tonne. A gross value royalty decision does not apply to these sales.
During the period, XYZ and GHI settle an existing commercial dispute on the basis that XYZ will pay GHI $50,000.
XYZ and GHI agree to offset the $50,000 settlement payment by XYZ against the $550,000 payable by GHI. Accordingly, GHI only pays XYZ $500,000 for the coal purchased during the period.
GHI ultimately only pays XYZ $400,000 before GHI is wound up.
Despite the settlement agreement and the underpayment by GHI, the gross value of the coal for royalty purposes is $550,000.
Other costs deductible from gross value
Mark Jackson
Commissioner of State Revenue
Date of issue: 30 June 2022
Public Ruling | Issued | Dates of effect | |
---|---|---|---|
From | To | ||
MRA001.3 | 30 June 2022 | 1 July 2022 | Current |
MRA001.2 | 21 December 2020 | 1 January 2021 | 30 June 2022 |
MRA001.1 | 1 October 2020 | 1 October 2020 | 31 December 2020 |