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    Cash flow tax rethink: implications for Australian mine project economics

    December 22, 2025|

    Reviewed by Joe Ashwell

    Cash flow tax rethink: implications for Australian mine project economics

    First reported on Australian Mining

    30 Second Briefing

    A Productivity Commission proposal to replace company tax with a hybrid cash flow tax has drawn a lukewarm response from the Minerals Council of Australia and the Association of Mining and Exploration Companies, which warn it could deter long-life, capital-intensive projects. Industry groups argue that immediate expensing of capital and tighter limits on interest deductibility may not suit multi-decade mines with heavy upfront spend on shafts, processing plants and rail links. They are calling for detailed modelling of impacts on marginal projects, junior explorers and existing royalty and PRRT settings before any shift proceeds.

    Technical Brief

    • Proposal centres on a “hybrid” cash flow tax combining features of income and expenditure-based systems.
    • Broader implication is that tax design must align with long-lead, capital-heavy resource project financing structures.

    Our Take

    Among the 59 Policy stories in our database, Australia features frequently in debates over resource taxation and royalties, so a cash flow tax proposal here will be read by operators as a potential bellwether for other fiscal changes rather than a one-off idea.

    For project developers tracked under our 812 Projects-tagged pieces, a shift towards cash flow–based taxation in Australia would mainly affect project finance models and debt covenants, as lenders typically key off post-tax cash flows and payback timing.

    The Productivity Commission’s involvement signals that any redesign of mining taxation in Australia is likely to be framed around long-run efficiency and investment incentives, which could favour capital-intensive projects if deductions for upfront spend are accelerated.

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    Prepared by collating external sources, AI-assisted tools, and Geomechanics.io’s proprietary mining database, then reviewed for technical accuracy & edited by our geotechnical team.

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