Section FB 20 — Income Tax Act 2007: Mining assets

FB 20 Mining assets When this section applies (1) This section applies when a resident mining operator transfers on a settlement of relationship property an asset that they used immediately before the transfer in deriving assessable income from mining. Transfer at cost, reduced value, or reduced expenditure (2) The transfer is treated as a disposal and acquisition for an amount equal to the least of— (a) the amount of expenditure incurred by the transferor in acquiring the asset: (b) when the transferor has been allowed a deduction for an amount of depreciation loss in relation to the asset, the adjusted tax value at the start of the year of transfer: (c) when the asset has been acquired as a result of mining exploration expenditure or mining development expenditure incurred by the transferor for which they have been allowed a deduction under sections DU 1 and DU 9(1) (which relate to mineral mining expenditure), the amount of expenditure not allowed as a deduction under those provisions. Transferee’s expenditure (3) The transferee is treated as having incurred expenditure in acquiring the asset equal to the amount determined under subsection (2). When transferee not a resident mining operator (4) Subsections (5) and (6) apply when— (a) the transferor is treated as having disposed of the asset for an amount determined under subsection (2)(c); and (b) the transferee is not a resident mining operator at and after the date of transfer. Treatment of disposal and transferee (5) If the transferee disposes of the asset, they are treated as a resident mining operator in relation to the disposal, and the disposal is treated as a sale to which sections CU 3 , CU 12(1) , DU 2 , and DU 9(1) (which relate to mining) apply. Consideration for disposal (6) For the purposes of subsection (5), and sections CU 1 to CU 11 , DU 1 to DU 8 , IA 7(7) , IS 1 to IS 4 , and IS 6 (which relate to mining and mining companies’ tax losses), the consideration for the disposal is the amount by which the amount derived on the disposal under subsection (5) is more than the amount determined under subsection (2)(c). When transferee is resident mining operator (7) If the transferee is, at and after the date of transfer, a resident mining operator, and the transferor is treated as having disposed of the asset for an amount determined under subsection (2)(c), then for the purposes of sections CU 3 , CU 10 , DU 2 , and DU 6 , the transferee is treated as having acquired the asset as a result of mining exploration expenditure or mining development expenditure incurred by the transferee. Defined in this Act: adjusted tax value , amount , assessable income , date of transfer , deduction , depreciation loss , income from mining , mining development expenditure , mining exploration expenditure , resident mining operator , settlement of relationship property , year of transfer , Compare: 2004 No 35 s FF 19