Twenty Seven Co Ltd (ASX:TSC) has been advised by the Australian Taxation Office (ATO) that its application to participate in the Federal Government's Junior Minerals Exploration Incentive (JMEI) scheme for the 2020-2021 income year has been accepted.
The company applied for JMEI credits for FY21 totalling $1.005 million with credits only available to new TSC shares issued between July 1, 2020, and June 30, 2021.
This successful application marks Twenty Seven Co’s second year of participating in the JMEI Scheme.
The JMEI applies to Australian residents who acquire new shares in a greenfields minerals explorer before the end of an income year in which the commissioner has made an exploration credits allocation but on or after the day on which the allocation is made.
The shares must be equity interests for the purposes of the debt and equity tax rules.
Australian residents entitled to offsets
Australian resident shareholders issued with exploration credits will generally be entitled to refundable tax offsets (for individual shareholders or superannuation funds) or franking credits (for companies).
The exploration credit that can be issued to an investor is limited to the amount paid by the investor to acquire the new shares multiplied by the corporate tax rate.
Exploration credits must be issued in proportion to each eligible investor's investment so streaming of exploration credits to investors is not permitted.
Investors should be aware that Twenty Seven Co cannot guarantee that eligble shareholders will receive the maximum number of JMEI credits available as the actual number of JMEI credits received by each eligible shareholder for the 2020-2021 income year will be dependent on a number of factors including:
- The total number of new Twenty Seven Co shares issued between July 1 and June 2021;
- The actual amount of allowable exploration incurred by Twenty Seven Co in the 2020/21 financial year;
- Twenty Seven Co’s tax losses for the 2020/21 financial year; and
- Each shareholder’s individual financial circumstance.
Receiving a JMEI credit could have tax consequences, therefore, all eligible shareholders are encouraged to seek their own independent advice before making a decision on whether to exercise options or participate in any offer to acquire new shares in the company.