Native Title Payments and Their Tax Consequences: Is the Federal Government’s Recommendation of a Withholding Tax the Best Approach?

Abstract

This article looks at several tax issues that arise in respect of native title. First, it introduces some of the range of payments that may be received by Indigenous Australians in respect of native title and mining on land that is subject to native title. Second, it analyses the current withholding tax regime relating to mining payments in respect of "Aboriginal land‟ under the Income Tax Assessment Act 1936 (Cth) ("ITAA36‟) to determine whether or not this regime applies to native title payments under the Native Title Act 1993 (Cth) ("NTA‟). The author concludes that it does not. It then looks at the potential application of income and capital gains tax to payments as a result of the NTA. Finally, the author considers whether an alternative withholding tax might be an appropriate approach to deal with the tax issues that arise regarding payments in respect of native title. The analysis considers this from the perspective of protecting the native title income stream for current and future generations and providing the revenue with a stable and appropriate tax base that is easy to administer. In other words, the article will conclude with a consideration of a withholding tax from a 'tax simplicity' perspective.

Keywords: income tax, native title