ABSTRACT

It is important to understand that a royalty is not explicitly a tax. It is actually a payment to a property owner in exchange for the right to use that property, or in this case exploit a mineral deposit or orebody. If, as is the case in Australia and many other mineral-rich countries, the minerals in the ground are owned by the government on behalf of the people; then it is considered appropriate that mine owners should recompense the government for the exploitation of these non-renewable mineral assets as a payment beyond or in addition to taxes on profits. This may manifest as a rent payment or as a royalty payment.