LU 1Tax credits for mineral miners

1. This section applies for an income year when—

2. either—
   1. a mineral miner incurs an amount of mining rehabilitation expenditure in relation to a mining permit area; or
   2. a mineral miner derives an amount under section CU 2 (Treatment of mining land) from the disposal of land or an interest in land in a mining permit area, and the amount the mineral miner derives from the disposal is less than the consideration that the mineral miner paid to acquire the land or interest in land; or
   3. a mineral miner incurs an amount of mining development expenditure in relation to a mining permit area for which the mining permit has been relinquished, has expired, has been revoked or surrendered, as those terms are used in the Crown Minerals Act 1991, and the miner has no existing privilege for the permit area; and
3. the mineral miner has a net mining loss for the mining permit area for the income year that is greater than the net income of the mineral miner for the income year from all other sources (the difference being the excess amount), calculated as follows:
   1. the mineral miner’s net mining loss is treated as if their only income were income derived from the mining permit area:
   2. the net income of the mineral miner from other sources is treated as if there were no income from the mining permit area.

4. The mineral miner has a tax credit for the tax year corresponding to the income year for an amount calculated using the formula—

   $expenditure\; or\; loss\; \times \; tax\; rate.$

   Where:

5. In the formula,—

6. expenditure or loss is the excess amount referred to in subsection (1)(b) to the extent to which it consists of the amounts referred to in subsection (1)(a)(i) to (iii):
7. tax rate is the basic rate of income tax set out in schedule 1, part A (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits).

8. Despite subsection (2), the maximum amount of the credit must not be more than the lesser of—

9. the result of the formula; and
10. the amount of income tax paid by the mineral miner on net income derived for all earlier tax years to the extent to which it relates to the mining permit area, calculated on a year-by-year basis and aggregated.

11. For the purposes of subsection (4), if the mineral miner is a trustee of a trust, the amount of tax paid for each earlier tax year is determined—

12. first, by reference to the amount of income tax paid under the obligations of a trustee under section HC 32 (Liability of trustee as agent); and
13. secondly, by reference to the amount of tax paid on trustee income; and
14. calculated on a year-by-year basis and aggregated.

15. For the purposes of subsection (4), if the mineral miner is an individual, the amount of tax paid for earlier tax years is calculated on a year-by-year basis and aggregated, as if their only income were income derived from the mining permit area.

16. In subsections (4)(b), (5)(c) and (6), a reference to a calculation on a year-by-year basis refers to a calculation starting with the immediately preceding tax year and working backwards to earlier tax years until the amount of tax paid is equal to or more than the amount referred to in subsection (4)(a).

17. To the extent to which the mineral miner has a tax credit under this section, the amount of the net mining loss giving rise to the credit does not form part of either a tax loss component or a net mining loss for the mineral miner.

18. The tax credit is available for use under section LA 6(2) (Remaining refundable credits: PAYE, RWT, and certain other items).

19. Subsection (8) overrides sections IA 2 and IA 7 (which relate to losses generally) and IS 1, IS 2, and IS 6 (which relate to tax losses for mineral mining).