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Income Tax Act 2007

Income - Excluded income - Definitions

CX 43: Farm-out arrangements for mining operations

You could also call this:

“Rules for sharing costs in mining partnerships”

When you’re involved in mining operations, you might use something called a farm-out arrangement. This is when one company (the farm-out party) agrees to let another company (the farm-in party) work on their mining area. The farm-in party usually pays for some of the costs or does some of the work. This payment or work is called farm-in expenditure.

If you’re the farm-out party (the one who owns the mining area), any farm-in expenditure you receive isn’t counted as income that you have to pay tax on. This applies whether you’re mining for oil and gas (a petroleum miner) or other minerals (a mineral miner).

This rule is part of the Income Tax Act 2007, which sets out how different types of income are taxed in New Zealand.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1513434.

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Part C Income
Excluded income: Definitions

CX 43Farm-out arrangements for mining operations

  1. Farm-in expenditure under a farm-out arrangement is excluded income of a petroleum miner or a mineral miner, as applicable, who is the farm-out party in the farm-out arrangement.

Notes
  • Section CX 43: replaced, on (applying for the 2014–15 and later income years), by section 21(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).