Australia’s government has published two consultation papers requesting comments on its proposed tax incentives on hydrogen and critical minerals production. The deadline for receiving feedback on the both is set for 12 July, 2024.
Both incentives will be administered through Australia’s tax system as a refundable tax offset to eligible producers of renewable hydrogen and processed and refined critical minerals for a maximum of 10 years between 2027-28 and 2039-40.
Hydrogen production tax incentive
The Hydrogen Production Tax Incentive (HPTI), announced in the 2024-25 Budget, is a time-limited measure to accelerate the growth of Australia’s hydrogen industry. The HPTI is intended to bring forward project development, make renewable hydrogen available sooner, and build scale to reduce production costs over time.
Proposed incentive details
- AUD 2 per kilogram of eligible hydrogen produced, provided as a refundable tax offset.
- The amount of the offset will not be adjusted for inflation.
- No additional incentive will be provided for meeting community benefit criteria or emissions intensity thresholds, the support is provided as a flat AUD 2 per kilogram of hydrogen produced where eligibility criteria are met.
Eligible entities
- Corporations that are subject to Australian income tax throughout the relevant income year (except entities that are fully exempt from paying corporate income taxes).
- Foreign investment will continue to be subject to Australia’s foreign investment settings.
Critical minerals production tax incentive
The critical minerals production tax incentive (CMPTI), announced in the 2024-25 Budget, will allow eligible entities to claim 10% of eligible expenditure for processing and refining any of the 31 minerals currently published on the Government’s Critical Minerals list through each eligible facility.
Eligible expenditure will exclude the costs of the raw materials, as well as the capital costs of depreciation and financing.
Proposed incentive details
- 10% of eligible expenditure on eligible processing and refining, provided as a refundable tax offset.
Eligible entities
- Corporations that are subject to Australian income tax throughout the relevant income year (except entities that are fully exempt from paying corporate income taxes).
- Foreign investment will continue to be subject to Australia’s foreign investment settings.
