ASX listed junior explorer Hammer Metals has accessed a little known Federal Government program to give their shareholders a tax windfall worth nearly half a cent per share.
Hammer successfully applied for inclusion in the federal Government’s “Exploration Development Incentive Scheme” which effectively allows exploration companies to pass on tax losses to their shareholders that were created by the company’s “greenfields” exploration activities in the previous financial year.
Greenfields exploration is defined as exploration that occurs where no resource has yet been defined.
Hammer shareholders will now be able to use those tax loss credits as though they were their own by creating a tax deduction against their income for the 2016 financial year.
This will provide a significant windfall for some shareholders.
The company will pass through to shareholders $600 000 worth of tax loss credits relating to their greenfields exploration activities for the 2015 financial year which equates to approximately half a cent per share
Shareholders who were holding Hammer stock as at the record date which is the 25th of May 2016, will be able to claim the company’s greenfields exploration tax loss credits on a pro-rata basis as a deduction against their own income for the 2016 financial year. Shareholders who held their shares in a company structure will be able to use the tax losses as franking credits.
This year a total of $21m worth of passed through tax credits will be paid to shareholders of various Australian companies as part of the federal Government’s “Exploration Development Incentive Scheme”.
The scheme allows loss making exploration companies to notify the Government of their estimated expenditure on greenfields exploration for the previous year by September 30th of the following financial year.
These losses are then passed onto shareholders as a tax loss credits in that year on a pro-rata basis depending on the level of equity ownership each shareholder has in the company.
