Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Deductions - Mineral mining expenditure

DU 3: Acquisition of land for mining operations

You could also call this:

“Deduction rules for mineral miners buying land for mining operations”

You can get a deduction if you’re a mineral miner and you buy land or an interest in land for your mining operations. However, this doesn’t apply to all land purchases. You can’t get the deduction for land that isn’t part of a mining permit area or next to one. You also can’t get it for certain other expenses, like those covered in [section DU 8(1)], or if you’ve already had a deduction for the land before selling it.

You don’t get this deduction right away. Instead, you get it in the income year when you sell the land or your interest in it. If you end up with a net mining loss in the tax year when you sell the land, you might be able to get a tax credit. This is explained in [section LU 1].

This deduction goes beyond the usual rules about capital expenses, but you still need to meet the general permission and other general limits. Remember, this is just about the tax rules for mineral miners buying land for mining. It doesn’t mean you’re allowed to mine anywhere you want.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1514097.

Topics:
Money and consumer rights > Taxes
Business > Industry rules
Previous

DU 2: Mining expenditure: rehabilitation expenditure, or

“Tax deductions for miners who repair land after mining”

Next

DU 4: Acquisition of mineral mining assets, or

“Rules for claiming expenses when buying mining-related assets”

Part D Deductions
Mineral mining expenditure

DU 3Acquisition of land for mining operations

  1. A mineral miner is allowed a deduction for expenditure incurred in acquiring land or an interest in land for the purposes of their mining operations or associated mining operations.

  2. Subsection (1) does not apply to the following expenditure:

  3. expenditure incurred on or in relation to land that—
    1. does not constitute a mining permit area or land adjacent to it:
      1. does not form, or is not intended to form, part of a mining permit area or land adjacent to it:
      2. expenditure referred to in section DU 8(1):
        1. expenditure for which the mineral miner has a deduction before disposing of the land or interest in land:
          1. residual expenditure.

            1. The deduction is allocated to the income year in which the mineral miner disposes of the land or interest in land.

            2. If the mineral miner has a net mining loss for a tax year after taking into account the amount derived from the disposal of the land or interest in land, they may have a tax credit for the amount of the loss on disposal under section LU 1 (Tax credits for mineral miners) for the corresponding income year.

            3. This section overrides the capital limitation. The general permission must still be satisfied and the other general limitations still apply.

            Notes
            • Section DU 3: replaced, on (applying for the 2014–15 and later income years), by section 41(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).