THE BOURSE WHISPERER: Rare earths-company Arafura Resources (ASX:ARU) has received a tax refund of $22.6 million.
The refund is for eligible research and development expenditure in relation to the development of the company’s Nolans rare earths project, which straddles the Northern Territory and South Australia.
“We appreciate the Australian Government’s long-term support for businesses such as ours, particularly in the current uncertain equity market conditions which present difficulties for raising capital,” Arafura Resources managing director Chris Tonkin said in the company’s announcement to the Australian Securities Exchange.
“This funding, together with the $9.9 million from our largest shareholder, ECE, expected to be received subject to shareholder and Foreign Investment Review Board approvals in the coming days, places Arafura in a sound financial position to complete its work programs and develop the Nolans project.
“Rare earths are a global strategic asset which Australia’s key trading partners require for their domestic industries.
“Support of this kind is of great assistance to projects such as ours.”
The R&D Tax Incentive is a targeted program that helps businesses offset a portion of costs relating to eligible R&D activities and innovation.
It aims to:
Boost competitiveness and improve productivity across the Australian economy;
Encourage industry to conduct R&D activities that may not otherwise have been conducted;
Provide businesses with more predictable, less complex support; and
Improve the incentive for smaller firms to engage in R&D.
The R&D Incentive is jointly administered by AusIndustry (on behalf of Innovation Australia) and the Australian Taxation Office.
AusIndustry is a specialist program delivery division within the Australian Government’s Department of Industry, Innovation, Science, Research and Tertiary Education.
Arafura indicated the unique aspects of it rare earths extraction process, which have been developed over a number of years, continue to be eligible.
In 2006, the company received a $3.3 million AusIndustry Commercial Ready Grant and since then, eligible R&D expenditure has been carried forward as potential future tax offsets.
In 2010 the Australian Government changed the R&D Incentive program to the current scheme.