New Zealand
19.A102. A concession exists similar to the former section 77C of the Australian legislation, in that sections
129BB and 129C of the Land and Income Tax Act 1954 allow a deduction of one-third of the amounts contributed
by a shareholder to the paid-up value of shares held by him in a mining company. Any premiums paid on the
issue of shares are not deductible under these provisions. If a mining company does
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not within a
reasonable time use for mining purposes amounts it receives from its shareholders, the Commissioner may
disallow the deduction for calls paid on shares to shareholders in the mining company or holding company as
the case may be.
19.A103. Where under the general law profits on the sale of mining shares are assessable, then, in determining the amount of the profit, the cost price of the shares is to be reduced by any deduction allowed to the taxpayer in respect of calls on those shares. A similar situation applies when calculating losses.
19.A104. Where the assessable profit on sale of mining shares is made by a company, and that company ploughs the profit back into further investment in mining or exploring for petroleum or specified minerals, the assessment of those profits (‘reinvestment profits’) is deferred. The company is allowed six years to reinvest the profits for mining purposes. The profits are in general assessed when the new mining investment is realised; but again there will be opportunity to reinvest in other mining activities, with a consequent further deferment of taxation of the profit so invested. The reinvestment profit can be invested by way of equity or loan capital; and if any portion of that amount is diverted for non-mining purposes within the six-year period, the relevant amount becomes assessable income of that year of diversion or expiry.
19.A105. Attention has already been drawn to the recent amendments to the income tax legislation conferring special tax treatment upon the income from mining derived by various classes of taxpayer: for example, mining companies pay tax on mining income at two-thirds of the normal company rate and non-resident mining operations are taxed at 45 per cent on their entire mining venture income.