Sharechat Logo

NZ government to tweak tax and royalty regimes for miners

Wednesday 31st October 2012

Text too small?

The government is moving to tweak tax and royalty regimes in a bid to increase the revenue it collects from the resources sector having signalled plans to facilitate mining.

The government is seeking submissions by Dec. 7 on a review of royalties paid by miners, excluding oil and gas companies, and a separate tax paper that excludes oil and gas and coal. New mineral mines will have to pay higher royalties and tax concessions for miners are being removed.

The government says the current tax regime for miners is concessionary and should be comparable to other industries so there is no bias in investment decisions.

The tax moves come after the government outlined a review of mining legislation in March as it seeks to encourage mining of a wider range of minerals in new areas to drive economic growth.

The Crown wants to receive a "fair financial return" from tax and royalties as minerals are mined, according to the documents released on Wednesday.

The tax review suggests removing immediate tax deductions, or in some cases tax deductions in advance, for expenditure that would normally be capitalised and depreciated over the useful life of the asset.

The royalties review recommends higher royalty rates for large and highly profitable mines. New rates only apply to new permits.

New Zealanders know that the royalties and taxes from mining companies pay for hospitals, school and roads, Energy and Resources Minister Phil Heatley says.

"There is real potential for that contribution to grow," he said.

The Reviewing the Royalties Regime for Minerals paper focuses on the royalty rates applied to coal, gold, silver, platinum group elements, ironsands, phosphates and seafloor massive sulphides (SMS).

A hybrid royalty of the higher of a 2 percent ad-valorem (AVR) or a 10 percent accounting profit (APR) royalty will apply to new coal, golf, silver, platinum, ironsands, phosphates and SMS permits.

Coal miners can make an annual accounting profit of $5 million before the 10 percent APR royalty would apply and for gold the figure is $2 million.

An existing threshold of $200,000 of annual net sales is retained before permit holders are liable to pay a royalty.

New underground coal gasification projects pay the higher of a 1 percent AVR or a 10 percent APR.

Currently gold, silver and platinum miners pay an AVR royalty of between 1 percent and 2 percent, depending on the size and coal miners pay a unit based royalty of $1.40 per tonne for hard and semi-hard coking coal and 80 cents a tonne for thermal and semi-soft coking coal.

NOTE: please be advised to read full articles from Business Desk Website, you will have to pay a subscription fee on their website.

BusinessDesk.co.nz



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Supplements, skincare firm poised for reverse listing
NZX, EEX eye carbon auction opportunity
A2 Milk boss steps down, shares fall 7.7%
NZX says operating earnings will reach top of guidance
NZ dollar consolidates weekly gain of more than a US cent
NZ dollar holds gains on improved dairy, bank capital outlook
MARKET CLOSE: NZ shares gain; banks rally on Reserve Bank capital decision
NZ dollar rises; bank capital rules less harsh than expected
RBNZ relaxes capital requirements, allows preference shares, extends phase-in
NZ dollar extends gain amid mixed US data, possible trade progress

IRG See IRG research reports