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

 

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:

Insurers Up For More Payouts: Chch Property Investor Wins Policy Appeal In Supreme Court

Ridgecrest NZ, a property investor, has won an appeal in the Supreme Court over insurance cover provided by IAG New Zealand for a Christchurch building damaged in four successive earthquakes. More>>

ALSO:

Other Cases:

Royal Society: Review Finds Community Water Fluoridation Safe And Effective

A review of the scientific evidence for and against the efficacy and safety of fluoridation of public water supplies has found that the levels of fluoridation used in New Zealand create no health risks and provide protection against tooth decay. More>>

ALSO:

Scoop Business: Croxley Calls Time On NZ Production In Face Of Cheap Imports

Croxley Stationery, whose stationery brands include Olympic, Warwick and Collins, plans to cease manufacturing in New Zealand because it has struggled to compete with lower-cost imports in a market where the printed word is giving way to electronic communications. More>>

ALSO:

Prefu Roundup: Forecasts Revised, Surplus Intact

The National government heads into the election with its Budget surplus target broadly intact, delivering a set of economic and fiscal forecasts marginally revised from May to reflect weaker commodity prices and a lower tax take. More>>

ALSO:

Convention Centre: Major New SkyCity Hotel And Laneway For Auckland

Today SKYCITY Entertainment Group Limited revealed plans to build a new hotel and pedestrian laneway of bars, restaurants and boutique shopping on land it owns in the Nelson and Hobson Streets block, expanding the SKYCITY Entertainment Precinct. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news