Section CU 3 — Income Tax Act 2007: Disposal of assets

CU 3 Disposal of assets When this section applies (1) This section applies when— (a) a mining company acquires an asset, including mining prospecting information or a mining or prospecting right, by incurring mining exploration expenditure or mining development expenditure; and (b) the company, whether or not still a mining company, disposes of the asset. Exclusion (2) This section does not apply when— (a) a mining company acquires an asset, including mining prospecting information or a mining or prospecting right, by incurring mining exploration expenditure or mining development expenditure; and (b) the company, whether or not still a mining company, passes the ownership of the asset to another person; and (c) the passing of ownership is not because the asset is sold to the other person; and (d) the company does not receive, and is not entitled to receive, consideration for the passing of ownership; and (e) the company and the other person deal with each other over the passing of ownership at arm’s length, even if they are associated persons at a time relevant to the passing of ownership. Income (3) The following are income from mining of the mining company: (a) the consideration that the company derives from the disposal of the asset, unless paragraph (b) applies: (b) in the cases described in subsections (4) to (7), the consideration specified in subsection (4) or (5) or (7). Consideration other than in cash (4) If some or all of the consideration for the disposal is other than in cash, and the disposal is not to an associated person, the consideration that is not in cash has the value agreed between the company and the person to whom the asset is disposed of. If the company and the person do not agree, or if the Commissioner considers that the value agreed is unreasonable, the consideration that is not in cash has the value that the Commissioner decides. Disposal to associated person (5) If the disposal is to an associated person, the consideration for the disposal is the market value that the asset has on the date of the disposal. When subsection (7) applies (6) Subsection (7) applies when— (a) the company disposes of the asset to a person acquiring it for use in carrying on their mining operations or associated mining operations or a mining venture; and (b) the company and the person give notice to the Commissioner that they have agreed to apply subsection (7); and (c) the notice is given to the Commissioner within 1 of the following times: (i) the time in which the company is required to file a return of income for the income year in which it disposes of the asset: (ii) a further time allowed by the Commissioner; and (d) the notice specifies an amount that— (i) is no more than the market value that the asset has at the date of the disposal; and (ii) is not less than the amount of any part of the consideration that is in cash. Amount specified by parties to disposal (7) The consideration for the disposal is the amount that the company and the person specify in the notice. Defined in this Act: amount , asset , associated mining operations , associated person , Commissioner , company , income year , mining company , mining development expenditure , mining exploration expenditure , mining operations , mining or prospecting right , mining prospecting information , mining venture , notice , return of income , Compare: 2004 No 35 s CU 3