Proceeds of Sale of Mining Right or Information.
19.46. It will be recalled that the Committee has recommended that exploration and prospecting expenditure should be deductible in full in the year in which it is incurred as a business expense, subject to the conditions outlined in paragraph 19.20. The treatment of such expenditure necessitates a different approach from that presently adopted in relation to the sale of a mining right or information. The Committee regards such an asset as being the stock-in-trade of a person engaged in the business of mining and any other person who, by virtue of the criteria outlined in paragraph 19.20, is entitled to an immediate deduction in respect of his exploration or prospecting expenditure. There would appear to be no difference between the ‘mining right’ and the ‘mining information’ for the purpose of applying this principle. Consequently, the Committee has formed the view that the proceeds of sale of a mining right or information should be brought to account in full in the year of sale. This approach would also provide a convenient brake on the consummation of a sale at an inflated value where the purchaser, by virtue of the recommendation contained in paragraph 19.44, is entitled to amortise the cost of such right or information by way of deduction from assessable income over the life of the mine. Difficulties may arise where the exploration expenditure deducted in previous years is unrelated to the mining right or information disposed of, but this difficulty could best be met by application of the approach directing that all sale proceeds be assessable on the basis that the mining right or information is part of the mine's stock-in-trade regardless of the manner of acquisition.