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

 

Scoop Business: RBNZ Keeps OCR At 3.5%, Signals Slower Pace Of Future Hikes

Reserve Bank governor Graeme Wheeler kept the official cash rate at 3.5 percent and signalled he won’t be as aggressive with future rate hikes as previously thought as inflation remains tamer than expected. The kiwi dollar fell to a seven-month low. More>>

ALSO:

Weather: Dry Spells Take Hold In South Island

Many areas in the South Island are tracking towards record dry spells as relatively warm, dry weather that began in mid-August continues... for some South Island places, the current period of fine weather is quite rare. More>>

ALSO:

Scoop Business: Productivity Commission To Look At Housing Land Supply

The Productivity Commission is to expand on its housing affordability report with an investigation into improving land supply and development capacity, particularly in areas with strong population growth. More>>

ALSO:

Forestry: Man Charged After 2013 Death

Levin Police have arrested and charged a man with manslaughter in relation to the death of Lincoln Kidd who was killed during a tree felling operation on 19 December 2013. More>>

ALSO:

Smells Like Justice: Dairy Company Fined Over Odour

Dairy company fined over odour Dairy supply company Open Country Dairy Limited has been convicted and fined more than $35,000 for discharging objectionable odour from its Waharoa factory at the time of last year’s ”spring flush” when milk supply was high. More>>

Scoop Business: Dairy Product Prices Decline To Lowest Since July 2012

Dairy product prices dropped to the lowest level since July 2012 in the latest GlobalDairyTrade auction, led by a slump in rennet casein and butter milk powder. More>>

ALSO:

SOE Results: TVNZ Lifts Annual Profit 25% On Flat Ad Revenue, Quits Igloo

Television New Zealand, the state-owned broadcaster, lifted annual profit 25 percent, ahead of forecast and despite a dip in advertising revenue, while quitting its stake in the pay-TV Igloo joint venture with Sky Network Television. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand

Mosh Social Media
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news