AHEAD of reporting season, brokers have begun forecasting the impact of Australia's minerals resource rent tax on heavyweights BHP Billiton and Rio Tinto.

Deutsche Bank analyst Paul Young reckons accounting adjustments could see both BHP and Rio create a deferred tax asset worth between USD 1 billion (950 million) and USD 3 billion, which will be unwound as the MRRT is paid.

Mr Young said in a note to clients that "Coal miners may not book a DTA due to the current outlook for coal prices; however, the iron ore miners will likely book a DTA adding that the DTA would be recalculated every six months and would depend on variables including the iron ore price, mine life, net asset backing and book value.”

Mr Young said that "This 'could be big, could be small' but there will effectively be a P&L tax credit that will lower the tax rate and increase headline earnings for the iron ore and coal miners adding that because it's a non cash book entry, it would not impact underlying earnings.
The most influential people in Sport.”

Source - The Australian

(www.steelguru.com)