Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

NZ targets $30M extra tax from mining tax changes

NZ targets $30M extra tax from mining tax changes

By Pattrick Smellie

May 20 (BusinessDesk) - The government's enthusiasm for mining does not run to leaving " very concessionary" tax treatment rules for mining company expenses in place, with Revenue Minister Peter Dunne tabling new legislation to raise around $30 million a year in extra tax from miners.

A regulatory impact statement accompanying the new legislation, tabled in Parliament this afternoon, shows the mining industry is concerned the decision will make New Zealand less attractive to international mining investors.

However, an analyst with the mining lobbyist Straterra, Bernie Napp, welcomed the government's decision to allow accumulated tax losses to be carried over when a mining operation changes ownership.

Most other companies lose access to accumulated tax losses, which can be offset against future income, during an ownership change. The ongoing concession to miners appears to recognise that many mining prospects are worked up and then sold to companies with the necessary expertise and capital to develop the mine.

The proposals relate to some 200 New Zealand companies in the gold, silver and ironsands, and could be expected to have an impact on new would-be offshore miners such as Chatham Rock Phosphate, which will be the first company to seek a mining licence under new rules governing mining in New Zealand's 200 mile exclusive economic zone.

The argument for changing mining's special treatment is the same as that mounted for other sectors over recent decades: that a low rate, broad-based tax system, which treats investments equally, is preferable to a more complex, concessionary tax system, which may lead to higher tax rates being applied across the economy as a whole.

The Inland Revenue Department says it considers "sector-specific rules will provide a more orthodox tax treatment to the sector (by removing the concessionary treatment), while still providing certainty and catering for some distinctive features of the sector."

In particular, officials have accepted that spending on a mine falls into several phases: prospecting, exploration, development, mining, and rehabilitation.

The new rules will also require expenditure to deducted over the "life of the mine", with special treatments allowed to deal with the fact that a mine's working life can be uncertain when mining begins. A mine will have a maximum life for expenditure deductibility and depreciation purposes of 25 years.

The mining industry argued officials misunderstood the arguments about capital allocation. The question was not whether investment funds went to mining or another New Zealand industry, but whether funds available for mining were invested in New Zealand or elsewhere, said Napp.

However, the IRD concluded that "even if tax settings are a consideration when investing into a certain jurisdiction, they will - provided the rules are not actively discriminatory - be relatively insignificant compared to other factors."

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Petya: New Ransomware Campaign Hits Worldwide

A new ransomware campaign known as Petya is affecting computer networks using Microsoft Windows. It was first seen affecting systems in the Ukraine, but is quickly spreading across other computer networks in Europe. More>>

ALSO:

Skodafone Goneski: Sky TV, Vodafone Drop $3.44 Billion Merger Plan

Sky Network Television and Vodafone New Zealand have terminated their merger agreement which aimed to create the country's largest telecommunications and media group, and have withdrawn an appeal against the Commerce Commission's rejection of the plan. More>>

Quake Insurance: Reforms To EQC Act Announced

· Increasing the monetary cap from $100,000 (plus GST) to $150,000 (plus GST) for EQC building cover.
· Clarifying EQC land cover is for natural disaster damage that directly affects the insured residence or access to it... More>>

ALSO:

Reserve Bank: Official Cash Rate Unchanged At 1.75 Percent

Global economic growth has increased and become more broad-based. However, major challenges remain with on-going surplus capacity and extensive political uncertainty... More>>