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Income Tax Act 2007

Income - Income from mineral mining

CU 4: Recovery of certain expenditure

You could also call this:

“Repaying tax deductions when mineral exploration costs lead to production”

If you’re a mineral miner, you need to know about some rules for money you spend on exploring for minerals. Here’s what happens:

You spend money to explore for minerals as part of your mining work. You’re allowed to deduct this money from your taxes in a certain year. This rule applies to years after 2013-2014.

You have to keep records of this spending, as required by section 22 of the Tax Administration Act 1994. If your spending creates something valuable (like equipment or information) that you then use to produce industrial minerals for sale, there’s a special rule.

In this case, you’re treated as if you earned some extra income. The amount of this ‘income’ is the same as what you spent to create the valuable thing. But it can’t be more than the amount you were allowed to deduct from your taxes earlier.

This ‘income’ is counted in the year when you start using the valuable thing to produce industrial minerals for sale.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1512984.

Topics:
Money and consumer rights > Taxes
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Part C Income
Income from mineral mining

CU 4Recovery of certain expenditure

  1. This section applies when—

  2. a mineral miner incurs an amount of mining exploration expenditure in relation to their mining operations or associated mining operations; and
    1. the mineral miner is allowed a deduction for the expenditure for an income year under section DU 1(1)(b) (Mining expenditure: prospecting and exploration expenditure); and
      1. the income year is later than the 2013–14 income year; and
        1. the expenditure is incurred in an income year for which the mineral miner is required under section 22 of the Tax Administration Act 1994 to keep records; and
          1. the expenditure results in, produces, or generates an asset for the mineral miner; and
            1. the mineral miner uses the asset for, or in relation to, the commercial production of a listed industrial mineral.

              1. The mineral miner is treated as deriving income to the extent of the amount of expenditure that resulted in, produced, or generated the asset. However, the amount must not be more than the amount of the deduction referred to in subsection (1)(b).

              2. The income is allocated to the income year in which the mineral miner uses the asset for, or in relation to, the commercial production of the mineral.

              Notes
              • Section CU 4: replaced, on (applying for the 2014–15 and later income years), by section 14(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).