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New Zealand

19.A89. As noted earlier, no distinction is made under New Zealand tax legislation between exploration and development expenditure: an immediate write-off is allowed in respect of both categories in the manner indicated.

19.A90. Where a landowner derives income by way of royalties from the sale of non-specified minerals extracted from his land or by way of mining, he is assessable on the profits. However, the New Zealand Act allows for the ‘commodity cost’ of the minerals realised to be deducted in ascertaining that income. This is in effect a depletion allowance of the cost type, as it allows miners to reckon their tax profits from the enterprise after deducting all working expenses and ‘an amount equal to the cost of’ those minerals. This involves matching the depletion allowance on the wasting mineral resource to the rate of production. The capital figure requiring amortisation is the cost of the resource plus developmental outlays.

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