Tax office cuts mining profits unit

The Australian Taxation Office has cut the staff who were to ensure firms paid their mining tax even though the tax is still law.

About 100 of 140 people in the ATO's resource rent tax area, which oversees the mining and petroleum resource rent taxes, have already been moved.

The tax office defended the move amid concerns the ATO had pre-empted Parliament and put tax revenue at risk.

The Senate rejected the Government's MRRT repeal Bill last month and it is not expected to return to Parliament until July.

The Palmer United Party signalled it would not support the Bill unless the Government dumped plans to deny about $250,000 to children of injured Defence personnel, payments tied to the tax. This means the MRRT may remain until late this year.

ATO staff in the resource rent tax area were moved to the public groups and international area, a new unit, soon after the Abbott Government was elected.

Since then, most special rent tax staff have been moved into other areas or taken voluntary redundancy.

The most senior resource rent tax officer retired early last month.

The ATO confirmed just 30 staff were now dealing with "active compliance and technical advice" for the MRRT and its petroleum counterpart. The PRRT is expected to reap about $2 billion this year and gradually increase as the oil and gas sectors grow.

It is also expected to become more important if the Government extends the PRRT to onshore oil and gas.

One insider said there were deep concerns at the move by Tax Commissioner Chris Jordan, which appeared to make it easier for companies to avoid the MRRT.

But an ATO spokesman said there were still well-qualified staff to deal with MRRT issues and the changes would not affect overall mining tax revenues.

The ATO was effectively banking on the MRRT's repeal before the next financial year.

Shadow assistant treasurer Andrew Leigh said the move jeopardised key revenues to score a cheap political point.

"Every dollar foregone means higher taxes or fewer services for ordinary Australian families," he said.