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DU 7: Deduction for certain mining expenditure spread on basis of units of production
or “Spreading mining costs as a tax deduction based on production”
You could also call this:

“Types of spending in mineral mining and where to find them in the law”

You need to know about four types of mineral mining spending. These are explained in different parts of the law:

  1. Mining prospecting spending is explained in section DU 9.
  2. Mining exploration spending is explained in section DU 10.
  3. Mining development spending is explained in section DU 11.
  4. Mining rehabilitation spending is explained in section DU 12.

It’s important to understand that these types of spending are different from each other. Even if you spend money on exploration, development, or rehabilitation at a time when you might usually do prospecting, it still counts as exploration, development, or rehabilitation spending, not prospecting spending. This matters for several parts of the tax law, including how you report income from mining, how you spread out certain mining costs over time, and how you calculate tax credits and losses related to mining.

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Next up: DU 9: Some definitions

or “Explaining key terms used in mining prospecting and exploration”
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Part D Deductions
Mineral mining expenditure: Classes of mining expenditure

DU 8Classes of mineral mining expenditure

  1. Sections DU 9 to DU 12 set out the classes of mineral mining expenditure. They are—

  2. mining prospecting expenditure, see section DU 9:
    1. mining exploration expenditure, see section DU 10:
      1. mining development expenditure, see section DU 11:
        1. mining rehabilitation expenditure, see section DU 12.

          1. For the purposes of this subpart, subpart CU (Income from mineral mining), sections EJ 20B to EJ 20E (which relate to spreading rules for certain mining expenditure), GB 20 (Arrangements involving petroleum and mineral mining), IA 7(7), IS 1, and IS 2 (which relate to tax losses), and LU 1 (Tax credits for mineral miners), no amount of expenditure that properly falls into a class of expenditure referred to in subsection (1)(b) to (d) may be characterised as mining prospecting expenditure because of the timing of the expenditure or for any other reason.

          Notes
          • Section DU 8: 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).