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Unpacking the Junior Minerals Exploration Incentive (JMEI)

Unpacking the Junior Minerals Exploration Incentive (JMEI)

On 5 May 2021, the government announced the renewal of the Junior Mineral Exploration Incentive (JMEI), this was later confirmed in the federal budget papers. The JMEI allows Australian resident greenfields exploration companies to pass on credits to their shareholders for eligible exploration expenditure.

Key take-aways
  • Dates and deadlines are critical, the scheme has a number of deadlines that must be met.
  • The JMEI requires entities to estimate their exploration spend and loss position before the start of the income year. The planning should incorporate the amount and timing of capital raisings which will be included in the JMEI claim.
  • A separate share register may now have to be prepared to participate in the program.
  • Investors and their advisors need to be wary that the credits received as part of this program will reduce the cost base of their shares.

Who can access the incentive?

New investors in “greenfield minerals explorers” will be eligible to receive either a franking credit for corporate entities or a refundable tax offset for other investors.

The entitlement to a credit (franking or offset) is not transferrable, meaning that only the initial investor in a new capital raising can access the credit. In other words, a credit does not attach to shares, but is only available to participants of a capital raising for exploration. This major change from the EDI better targets the scheme, but also increases its complexity and potentially requires participating company to keep a separate register for participants of certain raisings.

Greenfield minerals explorers

Broadly, eligible greenfield minerals explorers are Australian resident companies that:

  • Incur greenfields minerals expenditure for an income year; and
  • Have not carried on any mining operations or are connected with, or an affiliate, of another entity that has carried on mining operations.

Greenfields minerals expenditure is any amount an entity can deduct under the tax provisions relating to exploration expenditure incurred on Australian projects (specifically sections 40-80(1) & 40-730(1)). The scheme also allows transferees in farm-in farm-out arrangements to qualify which is welcome for juniors.

Expenditure caps

JMEI credits are capped, the overall scheme has the same cap on renewal. Unlike previous schemes, unused credits in the first three years of the scheme can be rolled-over and utilised in subsequent years.

Income year

Annual cap









A major change from the old scheme (the Exploration Development Incentive or EDI) is the removal of the “modulation factor”, a major frustration of juniors that wanted certainty on their position. The new scheme will be administered on a first-in first-out approach, subject to some integrity provisions. To ensure that no entity can access the entire scheme merely by being the first applicant credits are limited to 5% of the entire annual cap per entity.

The process

The JMEI requires an application to the ATO before any expenditure is incurred or funds are raised. 

Application to the ATO

An entity is require to apply to the Commissioner within 1 month before the start of the financial year corresponding to the income years for which an allocation of credits is sought. The application must include an estimate of the entity’s greenfields minerals expenditure up to the end of the income year, tax loss and corporate tax rate.

The estimate is forward looking and requires some planning to be undertaken by juniors. There are certain integrity measures to ensure that estimates are reasonable, the ATO may consider the application in detail and require additional information to support the claim.

The Commissioner will then make a determination allocating exploration credits to an entity.

Issue shares entitled to credits

Following the determination the entity must raise funds and issue shares that are entitled to exploration credits. As noted previously, credits do not attach to the shares, it is the investor that is entitled to the credits.


The entity must actually incur eligible greenfields mineral expenditure to generate credits.

Lodge Tax return and issue credits

After the end of the year the entity must lodge their tax return, finalising their exploration spend and loss position.

Following lodgement of their tax return the entity can issue credits, limited to the smallest of their exploration deductions, loss position or exploration credit allocation. Investors are then able to claim include the credits in their income tax return. If returns have already been lodged they may be required to make an amendment.

This content is general commentary only and does not constitute advice. Before making any decision or taking any action in relation to the content, you should consult your professional advisor. To the maximum extent permitted by law, neither Pitcher Partners or its affiliated entities, nor any of our employees will be liable for any loss, damage, liability or claim whatsoever suffered or incurred arising directly or indirectly out of the use or reliance on the material contained in this content. Pitcher Partners is an association of independent firms. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities. Liability limited by a scheme approved under professional standards legislation.

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