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Income Tax Act 2007

Deductions - Mineral mining expenditure - Classes of mining expenditure

DU 11: Meaning of mining development expenditure: exclusion of operational expenditure

You could also call this:

“Costs to prepare for mining, excluding day-to-day expenses”

Mining development expenditure refers to the money you spend to prepare an area for mining. This includes getting ready for mining operations and related activities. It covers things like setting up the mining site, doing earthworks, and building tailing dams.

You can also count money spent on getting mining rights or permits under the Crown Minerals Act 1991. The same goes for getting resource consents for your mining work. Setting up mine infrastructure is part of this too. This could be things like vehicles, equipment for production, or storage areas. You can even include costs for communication equipment, fuel, light, power, or water for your mining operations.

However, some things don’t count as mining development expenditure. These include the cost of land, day-to-day running costs (called operational expenditure), and things you buy after you’ve started producing from the mine that will last longer than the mine itself. There are also some other specific costs that don’t count, which are listed in section DU 8(1)(a), (b), and (d).

Operational expenditure is different from development expenditure. It’s the money you spend on running the mine after you’ve started producing. This includes costs that don’t create something that will last more than a year.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1514127.

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Part D Deductions
Mineral mining expenditure: Classes of mining expenditure

DU 11Meaning of mining development expenditure: exclusion of operational expenditure

  1. Mining development expenditure means—

  2. expenditure that a mineral miner incurs in preparing a permit area for their mining operations or associated mining operations:
    1. expenditure on operations that are carried on by a mineral miner on a permit area in New Zealand for the purpose of deriving income and consist of—
      1. mining for 1 or more listed industrial mineral; or
        1. performing work directly related to mining for 1 or more listed industrial mineral; or
          1. undertaking earthworks, including tailing dams, that are necessary for the working of the mine.

          2. Mining development expenditure includes expenditure that the mineral miner incurs directly in relation to the permit area in—

          3. acquiring a mining right or permit under the Crown Minerals Act 1991 for their mining operations or associated mining operations:
            1. obtaining required resource consents for their mining operations or associated mining operations:
              1. establishing mine infrastructure on any of the following:
                1. plant or machinery, including vehicles or vessels:
                  1. production equipment or facilities:
                    1. storage facilities:
                    2. providing, or contributing to the cost of providing, communication equipment, fuel, light, power, or water in relation to their mining operations or associated mining operations in the permit area.

                      1. Mining development expenditure does not include—

                      2. the cost of land:
                        1. operational expenditure:
                          1. expenditure on property acquired after the start of commercial production from the permit area that has an estimated useful life that does not depend on the remaining assumed life of the mine:
                            1. expenditure referred to in section DU 8(1)(a), (b), and (d):
                              1. residual expenditure.

                                1. For the purposes of this section and section IS 2(1) (Treatment of net losses resulting from certain expenditure), operational expenditure means expenditure that—

                                2. is incurred in operations carried on by a mineral miner in a mining permit area; and
                                  1. is incurred after the start of commercial production from the mining permit area; and
                                    1. does not create, or contribute to the creation of, an asset that has an estimated useful life of more than 1 year.

                                      Notes
                                      • Section DU 11: 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).
                                      • Section DU 11(4)(c): amended (with effect on 1 April 2014 and applying for the 2014–15 and later income years), on , by section 63(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).