Mining Withholding Tax:

The Mining Withholding Tax was introduced in 1979 with the inclusion of division 11C of the Income Tax Assessment Act 1936. In broad terms, the Mining Withholding Tax is a tax imposed on mining companies who conduct mining activities on indigenous land. The tax was introduced by the federal government in a response to the enactment of legislation in the Northern Territory involving indigenous land rights.

Payments that are made to Indigenous people or groups relating to the use of Indigenous land for mining and exploration purposes are subject to the Mining Withholding Tax. The current rate of withholding tax is 4%. The tax that is to be paid is withheld by the mining company, government authority or other organisation that is making the payment to the Indigenous person or group. The body making the payment is required to withhold an amount from the mining payment in accordance with the PAYG withholding rules. The mining payments to which the withholding system applies include:

• Certain payments made to Aboriginal Land Councils;
• Royalties that are received by the Commonwealth for the mining of Aboriginal land; and
• Payments that are made relating to Aboriginal land for the issue of a miner's right or mining interest, the permission to obtain land to mine or explore, the permission to remain on land to mine or explore, and payments of mining royalties in relation to Aboriginal land.

Many economic, indigenous and environmental writers and commentators have written about the effects of the Mining withholding Tax on Indigenous people, however the tax has not been analysed from an income tax policy perspective.

The Mining Withholding Tax is a unique tax within the Australian taxation system. Due to the nature of the tax, it is important that you understand how the tax may affect you. Whether you are a mining company or an Indigenous group, our team of experienced tax lawyers can help you understand the effects of the Mining Withholding Tax and what your obligations, if any, may be.

To meet with one of our Solicitors, call us on (02) 9233 4048 or send an email to info@navado.com.au and arrange an appointment today. 

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