This was one of the key concerns of mining and oil and gas companies when the BTWG released its discussion paper in August.

The downside is, they will not get a cut in the business tax rate.

The BTWG was set up by the federal government to make recommendations on how the business tax system could be improved.

It was asked to find ways to cut the business tax rate while maintaining the same revenue flow.

Restricting the depreciation arrangements resources companies apply to their assets would have been one way of doing this.

The BTWG met with 20 stakeholder groups and received more than 80 submissions after releasing its discussion paper.

It has decided that changing the depreciation arrangements “could have a significant impact on the after-tax return on investment, particularly where there is a long lead time before income is produced (for instance, gas pipelines).

“Australia is currently experiencing an unprecedented level of investment, planned or underway, in the resources sector underpinned by strong demand from Asia.

“There are a number of significant investment decisions relating to resource projects that have recently been committed or will be considered in the near future.

“The sheer scale of capital investment in individual projects and the long lead times before production commences means changes made now to depreciation arrangements can have significant impacts on their expected returns.”

Indeed, this fear of queering the resources sector pitch was the number one reason the BTWG gave for not being able to recommend cutting the business tax rate.

It did, however, conclude that there were benefits to be gained from a lower company tax rate and that it should be Australia’s “ambition” to push for it.