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

 

Final Frontier: Rocket Lab And NASA Sign Commercial Space Launch Agreement

Rocket Lab has signed a Commercial Space Launch Act Agreement with the National Aeronautics and Space Administration (NASA). The agreement enables Rocket Lab to use NASA resources - including personnel, facilities and equipment - for launch and reentry efforts. More>>

ALSO:

Scoop Business: Wheeler Downplays Scope For ‘Large’ Rates Fall

Reserve Bank governor Graeme Wheeler says some market commentators are predicting further declines in interest rates that would only make sense for an economy in recession, although some easing is likely to be needed to maintain New Zealand’s economic growth. More>>

ALSO:

Ruataniwha Dam: Consent Conditions Could Mean Reduced Intensity

Legal advice sought by the Hawke’s Bay Regional Council on the Ruataniwha Dam consent conditions has confirmed that farmers who sign up to take water from the dam could be required to reduce the intensity of their farming operation to meet the catchment’s strict nitrogen limit. More>>

Health And Safety: Bill Now Sees Rules Relaxed For Small Businesses

Health and safety law reform sparked by the Pike River coalmine disaster has been reported back from the industrial relations select committee with weakened requirements on small businesses to appoint health and safety representatives and committees. More>>

ALSO:

Bearing Fruit: Annual Fruit Exports Hit $2 Billion For First Time

The value of fruit exported rose 20 percent (up $330 million) for the June 2015 year when compared with the year ended June 2014. Both higher prices and a greater quantity of exports (up 9.0 percent) contributed to the overall rise. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news