EJ 20ECertain mining expenditure spread on basis of units of production

1. This section applies for the purposes of section DU 7 (Deduction for certain mining expenditure spread on basis of units of production) when a mineral miner—

2. incurs expenditure described in section DU 6(1)(a) (Deduction for certain mining expenditure spread over assumed life of mine) on or in relation to their mining operations or associated mining operations in a mining permit area; and
3. starts to use the permit area to derive income; and
4. either—
   1. uses IFRS rules to prepare their financial statements; or
   2. keeps appropriate records that are sufficient to enable the Commissioner to verify the calculations used by the mineral miner; and
5. chooses to apply this section in the way described in subsection (2).

6. The mineral miner may make an election to apply this section in relation to the permit area in a return of income for an income year that is the first year in which the miner's commercial production of a listed industrial mineral from the mining permit area starts. The election is irrevocable and applies only to expenditure referred to in subsection (1)(a).

7. The deduction for the expenditure incurred by the mineral miner and allocated to an income year is calculated using the formula—

   $(reserve\; expenditure\; -\; previous\; expenditure)\times \; reserve\; depletion\; for\; the\; year\; ÷\; proven\; and\; probable\; reserves.$

   Where:

8. In the formula,—

9. reserve expenditure is the total amount of the mineral miner's expenditure described in section DU 6(1)(a) for the permit area for the income year and earlier income years to which this section applies:
10. previous expenditure is the total expenditure for the permit area that has been allocated to an earlier income year to which this section applied:
11. reserve depletion for the year is the amount of a listed industrial mineral produced from the permit area for the income year:
12. proven and probable reserves is the amount of the proven ore reserves and probable ore reserves of the listed industrial mineral for the permit area as set out in the reserve statement for the area, provided the reserve statement is prepared in accordance with a classification code recognised for the purposes of estimating reserves and resources under the Crown Minerals (Minerals other than Petroleum) Regulations 2007.

13. In subsection (4)(c) and (d), the amount must be expressed in an appropriate unit of measure as set out in the mineral miner's reserve statement, and must be the same measure used in the formula for the items defined in those paragraphs.

14. For the purposes of this section, a mineral miner may allocate expenditure for an income year under this section in relation to a mine rather than in relation to a mining permit area, but only if—

15. the mineral miner uses IFRS rules to prepare their financial statements; and
16. the allocation in relation to the mine is permitted for the purposes of those statements.

17. Despite subsection (2), a mineral miner may make an election to apply this section in relation to an existing permit area for the 2014–15 income year. The election is irrevocable and applies to expenditure incurred by the mineral miner in the permit area for the income year and later income years.

Notes

• Section EJ 20E: inserted, on 1 April 2014 (applying for the 2014–15 and later income years), by section 50 of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
• Section EJ 20E(4)(a): amended (with effect on 1 April 2014 and applying for the 2014–15 and later income years), on 30 June 2014, by section 74(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
• Section EJ 20E list of defined terms mining development expenditure: repealed (with effect on 1 April 2014), on 30 June 2014, by section 74(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).