“CD 36B Foreign superannuation withdrawals and pensions from foreign superannuation scheme

• An amount paid to a person by a company that is a foreign superannuation scheme is not a dividend if the person derives the amount as a—

  • “(a) foreign superannuation withdrawal:

  • “(b) pension.

  “Defined in this Act: company, dividend, foreign superannuation withdrawal”.

“CF 3 Withdrawals from foreign superannuation scheme

• “When this section applies

  “(1) This section applies when a New Zealand resident derives a benefit (a foreign superannuation withdrawal) that—

  • “(a) is not a pension or annuity; and

  • “(b) arises from an interest other than a FIF superannuation interest, in a foreign superannuation scheme (the scheme), that the person acquires—

    • “(i) when the person is a non-resident:

    • “(ii) in a transaction referred to in subsection (21)(b) or (d) from a person who acquired the interest in the scheme as a non-resident.

  “Income

  “(2) The foreign superannuation withdrawal is income of the person if the benefit is in the form of—

  • “(a) an amount derived by the person as a member or beneficiary of the scheme:

  • “(b) an interest of the person in the scheme, withdrawn for reinvestment as an interest of the person in a superannuation scheme in New Zealand:

  • “(c) an interest of the person in the scheme, outside Australia, withdrawn for reinvestment as an interest of the person in a superannuation scheme in Australia:

  • “(d) an interest of the person in the scheme withdrawn for reinvestment as an interest of another person in a superannuation scheme.

  “Exception

  “(3) A foreign superannuation withdrawal is not income of the person under subsection (2)(d) if the benefit is an interest of the person in the scheme withdrawn—

  • “(a) on the death of the person or under a relationship agreement arising from an event (the relationship cessation) that occurs when,—

    • “(i) for a marriage or civil union of the person, the marriage or civil union is dissolved or the person and the person's spouse or civil union partner separate or begin to live apart (whether or not they continue to live in the same residence):

    • “(ii) for a de facto relationship of the person, the de facto relationship ends; and

  • “(b) for immediate reinvestment as an interest, in a foreign superannuation scheme outside Australia, of another person who is—

    • “(i) a spouse, civil union partner, or de facto partner of the person immediately before the death or the relationship cessation; and

    • “(ii) a New Zealand resident.

  “Amounts within other provisions

  “(4) A foreign superannuation withdrawal derived by a resident is subject to—

  • “(a) section CW 28B (Foreign superannuation withdrawal in initial period of residency), if the person—

    • “(i) is a resident under section YD 1; and

    • “(ii) derives the foreign superannuation withdrawal in the exemption period referred to in subsection (6):

  • “(b) section CW 28C (Foreign superannuation withdrawal exceeding given amount), if the foreign superannuation withdrawal is derived in the person's assessable period referred to in subsection (8), to the extent to which the foreign superannuation withdrawal exceeds—

    • “(i) the amount referred to in subsection (10) as the assessable withdrawal amount, if the person uses the schedule method; or

    • “(ii) the amount referred to in subsection (16) as the assessable withdrawal amount, if the person uses the formula method.

  “Eligibility for exemption period

  “(5) A person has an exemption period referred to in subsection (6) for an interest in the scheme if the person—

  • “(a) does not have, before acquiring the interest, an exemption period for an interest in a foreign superannuation scheme; and

  • “(b) acquires the interest as a non-resident; and

  • “(c) owns the interest as a non-resident until a date (the exemption commencement), whether before or after the commencement of this Act, when the person becomes a New Zealand resident.

  “Exemption period

  “(6) The period (the exemption period) in which a foreign superannuation withdrawal may be exempt income of the person under section CW 28B is the period from the exemption commencement to the earlier of—

  • “(a) the end of the period of 48 months beginning after the month in which the person meets the requirements of section YD 1(2) or (3) ignoring the rule in section YD 1(4):

  • “(b) the date on which the person becomes a non-resident again.

  “Assessable withdrawal amount

  “(7) The part (the assessable withdrawal amount) of a foreign superannuation withdrawal that is treated as not being exempt income of the person depends on the total period (the assessable period) referred to in subsection (8) for the person and the interest in the scheme.

  “Assessable period

  “(8) The assessable period for the person and a foreign superannuation withdrawal arising from an interest in the foreign superannuation scheme—

  • “(a) begins on the later of—

    • “(i) the date when the person becomes, for the first time after acquiring the interest in the scheme, a New Zealand resident who owns the interest in the scheme:

    • “(ii) the end of the person's exemption period:

  • “(b) ends on the date when the person derives the foreign superannuation withdrawal (the distribution time):

  • “(c) does not include a period in which the person is a non-resident.

  “Methods for determining assessable withdrawal amount

  “(9) The assessable withdrawal amount for a foreign superannuation withdrawal derived by the person is calculated for—

  • “(a) the schedule method under subsection (10), if paragraph (b) does not apply; or

  • “(b) the formula method under subsection (16), if—

    • “(i) the scheme is a foreign defined contribution scheme; and

    • “(ii) the person has the information required for the application of the formula method; and

    • “(iii) the person derives no withdrawal, other than a pension or annuity, from the scheme before 1 April 2014; and

    • “(iv) the person has not used the schedule method for the interest in the scheme; and

    • “(v) for a person who acquires the interest in the scheme of a spouse, civil union partner, or de facto partner by a transfer referred to in subsection (21)(d), the other person did not use the schedule method for the interest in the scheme; and

    • “(vi) the person chooses to use the formula method for the interest in the scheme.

  “Schedule method: assessable withdrawal amount

  “(10) The assessable withdrawal amount under the schedule method is calculated using the formula—

  (super withdrawal – contributions left) × schedule year fraction.

  “Definition of items in formula in subsection (10)

  “(11) In the formula in subsection (10),—

  • “(a) super withdrawal is the amount of the foreign superannuation withdrawal:

  • “(b) contributions left is the lesser of the amount of the item super withdrawal and the total amount of recognised contributions under subsection (19) made in the assessable period before the distribution time, reduced, for each withdrawal (the earlier withdrawal), other than a pension or annuity, made in the assessable period before the distribution time, by an amount equal to the lesser of—

    • “(i) the amount of the earlier withdrawal:

    • “(ii) the value of the item contributions left, immediately before the time of the earlier withdrawal:

  • “(c) schedule year fraction is the fraction given in schedule 33 (Default fractions of foreign superannuation withdrawals), column 2 of the row for which the entry in column 1 corresponds to the greater of 1 and the number of income years beginning—

    • “(i) in the assessable period under subsection (8); and

    • “(ii) before the distribution time.

  “Formula method: distributed gain

  “(12) Under the formula method, the part (the distributed gain) of a foreign superannuation withdrawal that is treated as consisting of gains made by the scheme during the assessable period is calculated using the formula—

  (super withdrawal × calculated gains fraction) – other gains.

  “Definition of items in formula in subsection (12)

  “(13) In the formula in subsection (12),—

  • “(a) super withdrawal is the amount of the foreign superannuation withdrawal:

  • “(b) other gains is the total amount of distributed gains referred to in subsection (12) for foreign superannuation withdrawals in the assessable period before the distribution time.

  “Formula method: calculated gains fraction

  “(14) In the formula in subsection (12), calculated gains fraction is the greater of zero and the amount calculated using the formula—

  predistribution + withdrawals – value – contributions

  predistribution.

  “Definition of items in formula in subsection (14)

  “(15) In the formula in subsection (14),—

  • “(a) predistribution is the value of the interest in the scheme immediately before the distribution time:

  • “(b) withdrawals is the total amount of foreign superannuation withdrawals from the interest in the scheme in the assessable period before the distribution time:

  • “(c) value is the value of the interest in the scheme at the beginning of the assessable period:

  • “(d) contributions is the amount of recognised contributions under subsection (19) made to the interest in the scheme in the assessable period before the distribution time.

  “Formula method: assessable withdrawal amount

  “(16) The assessable withdrawal amount under the formula method is the amount calculated using the formula—

  gain × (grow rate – 1) × tax rate × (assessable years − 1) + gain.

  “Formula method: grow rate

  “(17) In the formula in subsection (16), grow rate is the amount calculated using the formula—

  					(				)		1
  							accrued total				assessable years.
  							value

  “Definition of other items in formulas in subsections (16) and (17)

  “(18) In the formulas in subsections (16) and (17),—

  • “(a) gain is the amount of the distributed gain referred to in subsection (12) for the foreign superannuation withdrawal:

  • “(b) tax rate is the tax rate referred to in schedule 6, table 1, row 1 (Prescribed rates: PIE investments and retirement scheme contributions):

  • “(c) assessable years is the greater of 1 and the number of tax years beginning in the assessable period and before the distribution time:

  • “(d) accrued total is the value of the interest in the scheme immediately before the distribution time, increased by the value of foreign superannuation withdrawals from the interest in the scheme in the assessable period before the distribution time, and reduced by the value of recognised contributions under subsection (19) made to the interest in the scheme in the assessable period before the distribution time:

  • “(e) value is the value of the interest in the scheme at the beginning of the assessable period.

  “Recognised contributions

  “(19) The value of a payment to the scheme is taken into account in the formulas in subsections (10), (14), and (17) as a contribution (a recognised contribution) if the payment—

  • “(a) is made when the person is a New Zealand resident who is treated as a New Zealand resident under all applicable double tax agreements; and

  • “(b) is made by the person, by the person's employer, or for the benefit of the person; and

  • “(c) is required by the rules of the scheme; and

  • “(d) is subject to employer superannuation contribution tax or fringe benefit tax if made by the person's employer.

  “Interests in superannuation scheme

  “(20) For the purposes of this section, an interest of a person in a foreign superannuation scheme consists of rights of the person to benefit as a member or beneficiary from distributions by the superannuation scheme.

  “Calculating assessable period

  “(21) In calculating under subsection (8) the assessable period for a person who acquires an interest in a foreign superannuation scheme,—

  • “(a) if none of paragraphs (b) to (d) apply, the person is treated as acquiring the interest when the first contribution is made to the superannuation scheme, in relation to the rights, by or for the person; or

  • “(b) if the person is converting existing rights of the person in another foreign superannuation scheme (the former scheme) to corresponding rights of the person in the superannuation scheme, the person is treated as acquiring the interest when the person acquired the rights in the former scheme; or

  • “(c) if the person is acquiring existing rights in the superannuation scheme from another person, other than by a transaction to which paragraph (d) applies, the person is treated as acquiring the interest when the person acquires the rights; or

  • “(d) if the person is acquiring existing rights in the superannuation scheme of a New Zealand resident (the former owner) as a surviving spouse, civil union partner, or de facto partner of the deceased former owner, or as a former spouse, civil union partner, or de facto partner of the former owner under a relationship agreement arising from the end of the marriage, civil union, or de facto relationship, the person is treated as—

    • “(i) having owned the interest from the time the former owner acquired the interest; and

    • “(ii) having made all payments to the scheme that were made by or for the former owner; and

    • “(iii) having derived all distributions from the scheme that the former owner derived; and

    • “(iv) having been a New Zealand resident owning the interest during the assessable period of the former owner, at the time of the transfer, for the interest; and

    • “(v) continuing to own the interest from the time of the transfer.

  “Relationship with rest of Act

  “(22) If the assessable period for a person and an interest begins before 1 April 2014, this section overrides any provision of this Act that would otherwise quantify and allocate income of the person, from the part of the interest unaffected by withdrawals derived before 1 April 2014,—

  • “(a) for the period of ownership before 1 April 2014; and

  • “(b) not assessed for tax before 1 April 2014.

  “Defined in this Act: amount, de facto partner, double tax agreement, FIF superannuation interest, foreign defined contribution scheme, foreign superannuation scheme, foreign superannuation withdrawal, income, income year, New Zealand resident, non-resident, relationship agreement, superannuation scheme, transitional resident”.

• “(a) opening outstanding claims reserve is the total for the general insurance contracts of—

  • “(i) the amount of the insurer's closing outstanding claims reserve for the income year before the current year (the prior year), for general insurance contracts to which neither of subparagraphs (ii) and (iii) apply:

  • “(ii) if the current year is the first year that this section applies to the insurer and general insurance contracts, the amount of the insurer's reserve for outstanding claims liability, calculated at the end of the prior year using the basis the insurer used for tax purposes in that prior year, for general insurance contracts to which subparagraph (iii) does not apply:

  • “(iii) the amount calculated using the formula in section DW 4(4B) (Deductions for general insurance outstanding claims reserve), for general insurance contracts transferred to the insurer in the current year by a transfer to which section ED 3(1B) (Part-year tax calculations for transfers: general insurance OCR) applies:”.

“Subpart CU—Income from mineral mining

“CU 1 Mineral miner's income

• An amount that a mineral miner derives from their mining operations or associated mining operations is income of the mineral miner.

  “Defined in this Act: amount, associated mining operations, mineral miner, mining operations, income

“CU 2 Treatment of mining land

• “When this section applies

  “(1) This section applies when—

  • “(a) a mineral miner acquires land or an interest in land for the purposes of current or intended mining operations or associated mining operations; and

  • “(b) the land—

    • “(i) constitutes a mining permit area or is land adjacent to it:

    • “(ii) forms, or is intended to form, part of a mining permit area or land adjacent to it.

  “Income

  “(2) An amount that the mineral miner derives from disposing of the land or interest in land is income of the mineral miner for the income year of disposal.

  “Defined in this Act: amount, associated mining operations, income, income year, interest, land, mineral miner, mining operations, permit area

“CU 3 Disposal of mineral mining assets

• “Income

  “(1) The consideration that a mineral miner derives from disposing of a mineral mining asset is income of the mineral miner.

  “Relationship with section CX 43

  “(2) This section is overridden by section CX 43 (Farm-out arrangements for mining operations).

  “Defined in this Act: income, mineral miner, mineral mining asset

“CU 4 Recovery of certain expenditure

• “When this section applies

  “(1) This section applies when—

  • “(a) a mineral miner incurs an amount of mining exploration expenditure in relation to their mining operations or associated mining operations; and

  • “(b) the mineral miner is allowed a deduction for the expenditure for an income year under section DU 1(1)(b) (Mining expenditure: prospecting and exploration expenditure); and

  • “(c) the income year is later than the 2013–14 income year; and

  • “(d) the expenditure is incurred in an income year for which the mineral miner is required under section 22 of the Tax Administration Act 1994 to keep records; and

  • “(e) the expenditure results in, produces, or generates an asset for the mineral miner; and

  • “(f) the mineral miner uses the asset for, or in relation to, the commercial production of a listed industrial mineral.

  “Income

  “(2) The mineral miner is treated as deriving income to the extent of the amount of expenditure that resulted in, produced, or generated the asset. However, the amount must not be more than the amount of the deduction referred to in subsection (1)(b).

  “Timing

  “(3) The income is allocated to the income year in which the mineral miner uses the asset for, or in relation to, the commercial production of the mineral.

  “Defined in this Act: amount, associated mining operations, commercial production, deduction, income, income year, interest, land, listed industrial mineral, mineral, mineral miner, mining exploration expenditure, mining operations

“CU 5 Partnership interests and disposal of part of asset

• In this subpart and subpart DU (Mineral mining expenditure), and in sections CX 43 (Farm-out arrangements for mining operations), and GB 20 (Arrangements involving petroleum and mineral mining) unless the context otherwise requires,—

  • “(a) a partner is treated as having a share or interest in a mineral mining asset or other property of a partnership to the extent of their interest in the income of the partnership:

  • “(b) references to the disposal of an asset apply equally to the disposal of part of an asset.

  “Defined in this Act: income, mineral mining asset, partner, partnership

“Definitions

“CU 6 Meaning of mineral miner

• “Meaning

  “(1) Mineral miner means a person to which 1 of the following applies:

  • “(a) the person's only source of income is the business described in subsection (2); or

  • “(b) the person's main source of income is the business described in subsection (2); or

  • “(c) the person's only activity is 1 of the activities described in subsection (3); or

  • “(d) the person's main activity is 1 of the activities described in subsection (3); or

  • “(e) the person proposes that their only activity or their main activity be 1 of the activities described in subsection (3).

  “Business

  “(2) The business referred to in subsection (1)(a) and (b) is the business of mining a listed industrial mineral in New Zealand.

  “Activities

  “(3) The activities referred to in subsection (1)(c), (d), and (e) are—

  • “(a) exploring, searching, or mining for a listed industrial mineral in New Zealand; or

  • “(b) performing development work for exploring, searching, or mining for a listed industrial mineral in New Zealand.

  “Service for reward

  “(4) An activity described in subsection (3) does not include an activity done or to be done as a service to another person for reward unless the reward—

  • “(a) is wholly or mainly related to and dependent on the production of the listed industrial mineral; or

  • “(b) arises wholly or mainly through participation in profits from the production of the listed industrial mineral.

  “Defined in this Act: business, income, listed industrial mineral, New Zealand

“CU 7 Some definitions

• “Meaning of mining operations

  “(1) Mining operations means operations that—

  • “(a) are carried on by a mineral miner in a permit area in New Zealand for the purpose of deriving income; and

  • “(b) consist of—

    • “(i) exploring, or searching for 1 or more listed industrial minerals; or

    • “(ii) performing development work for exploring, searching, or mining for 1 or more listed industrial minerals; or

    • “(iii) extracting 1 or more listed industrial minerals; or

    • “(iv) mining or performing work directly related to mining for 1 or more listed industrial minerals.

  “Meaning of associated mining operations

  “(2) Associated mining operations means operations that—

  • “(a) are carried on in New Zealand in association with mining operations; and

  • “(b) consist of the accumulation, initial treatment, and transport of listed industrial minerals up to the stage at which the minerals—

    • “(i) are in a saleable form and in a location suitable for a person to acquire them; or

    • “(ii) are ready to be processed beyond the initial treatment or to be used in a manufacturing operation.

  “Meaning of initial treatment

  “(3) For the purposes of subsection (2)(b)(ii), initial treatment—

  • “(a) means—

    • “(i) breaking, cleaning, crushing, grading, grinding, leaching, screening, or sizing; or

    • “(ii) a treatment that is applied before concentration or, for a listed industrial mineral not requiring concentration, a treatment that would have been applied before concentration if the mineral had required concentration; or

    • “(iii) concentration; and

  • “(b) does not include—

    • “(i) calcining or sintering; or

    • “(ii) the production of, or processes carried on in connection with the production of, alumina, or pellets, or other agglomerated forms of iron.

  “Defined in this Act: associated mining operations, income, initial treatment, listed industrial mineral, mineral, mineral miner, mining operations, New Zealand, permit area

“CU 8 Meaning of listed industrial mineral

• “Meaning

  “(1) Listed industrial mineral—

  • “(a) means alumina minerals (for example, bauxite, corundum, diaspore, and gibbsite), aluminous refractory clays containing over 30% alumina in the fired state, aluminous refractory fireclays containing over 30% alumina in the fired state, andalusite, antimony, asbestos, barite, bentonite (except bentonite mined in the area formerly known as Malvern County), bituminous shale, chromite, copper, diatomite, dolomite, feldspar, fluorite, gold, halloysite, kaolin, kyanite, lead, magnesite, manganese, mercury, mica, molybdenite, nickel, perlite, phosphate, platinum group, pyrite, silica in lump form used only in producing silicon carbide or silicon metal or ferro silicon, silica in sand form used only in producing silicon carbide, sillimanite, silver, sodium chloride, sulphur, talc, tin, titanium, titanomagnetite, tungsten, uranium, wollastonite, zeolite, zinc, and zircon:

  • “(b) includes a mineral that is declared to be an industrial mineral in a Gazette notice given by the Minister.

  “Minister to consider

  “(2) Before giving a Gazette notice about a particular mineral, the Minister must consider whether the mineral is or is likely to be of importance—

  • “(a) in the industrial development of New Zealand:

  • “(b) as a means of reducing the quantity of industrial minerals or industrial rock required to be imported into New Zealand:

  • “(c) as an item of export from New Zealand.

  “Defined in this Act: listed industrial mineral, mineral, Minister, New Zealand

“CU 9 Some definitions

• “Meaning of mineral mining asset

  “(1) Mineral mining asset means—

  • “(a) a mining or prospecting right:

  • “(b) an exploration permit, a prospecting permit, or a mining permit:

  • “(c) a share or partial interest in an asset described in paragraph (a) or (b).

  “Inclusion for particular purpose

  “(2) For the purposes of section GB 20 (Arrangements involving petroleum and mineral mining), a mineral mining asset also includes an asset that is acquired by a mineral miner for the purposes of their mining operations or associated mining operations.

  “Exclusion

  “(3) A mineral mining asset does not include land.

  “Meaning of mining or prospecting right

  “(4) For the purposes of this section, mining or prospecting right—

  • “(a) means an authority, concession, easement, lease, licence, option, permit, privilege, right, or title relating to exploring, searching, or mining for, or carrying on an operation to recover, a listed industrial mineral; and

  • “(b) includes a share or interest in any such authority, concession, easement, lease, licence, option, permit, privilege, right, or title.

  “Defined in this Act: associated mining operations, exploration permit, land, lease, listed industrial mineral, mineral miner, mineral mining asset, mining operations, mining or prospecting right, mining permit, permit, prospecting permit”.

“CV 19 Additional income for certain imputation credits

• “When this section applies

  “(1) This section applies when a person has assessable income for the purposes of section LE 1 (Tax credits for imputation credits) because section LE 1(4B) applies (the LE 1(4B) income), and the LE 1(4B) income includes an imputation credit.

  “Income

  “(2) For the income year to which the LE 1(4B) income relates, the person derives an amount of income equal to the amount of the tax credit for the imputation credit under section LE 8B (Dividends from certain FIF interests).

  “Defined in this Act: assessable income, imputation credit, income, income year, tax credit”.

“qualifying foreign equity investor means a person who is not resident in New Zealand and who is 1 or more of—

• “(a) a foreign exempt entity:

• “(b) a person who is part of a foreign exempt partnership:

• “(c) a foreign exempt person.”

“CW 28B Foreign superannuation withdrawal in initial period of residency

• A foreign superannuation withdrawal is exempt income of a person if the person—

  • “(a) meets the requirements of section CF 3(4)(a) (Withdrawals from foreign superannuation scheme); and

  • “(b) derives the foreign superannuation withdrawal in the exemption period referred to in section CF 3(6) for the person.

  “Defined in this Act: exempt income, foreign superannuation withdrawal, transitional resident

“CW 28C Foreign superannuation withdrawal exceeding given amount

• A foreign superannuation withdrawal derived by a person in the assessable period referred to in section CF 3(8) (Withdrawals from foreign superannuation scheme) for the person is exempt income of the person to the extent to which the foreign superannuation withdrawal exceeds the amount—

  • “(a) calculated using the formula in section CF 3(10) as the assessable withdrawal amount, if the person uses the schedule method under that section; or

  • “(b) calculated using the formula in section CF 3(16) as the assessable withdrawal amount, if the person uses the formula method under that section.

  “Defined in this Act: exempt income, foreign superannuation withdrawal”.

“CW 55BAB Rebate of fees paid by FIF

• “When this section applies

  “(1) This section applies to a person having an attributing interest in a foreign investment fund when—

  • “(a) the FIF pays fees to another person; and

  • “(b) the person derives, from the other person, a rebate of the fees; and

  • “(c) the person is not allowed a deduction for the fees; and

  • “(d) the person's FIF income or loss from the interest is not calculated using the comparative value method.

  “(2) The amount of the rebate is exempt income.

  “Defined in this Act: attributing interest, comparative value method, deduction, exempt income, FIF, foreign investment fund, loss, pay”.

“CX 43 Farm-out arrangements for mining operations

• Farm-in expenditure under a farm-out arrangement is excluded income of a petroleum miner or a mineral miner, as applicable, who is the farm-out party in the farm-out arrangement.

  “Defined in this Act: excluded income, farm-in expenditure, farm-out arrangement, mineral miner, petroleum miner”.

“CZ 21B Optional treatment of withdrawals from foreign superannuation schemes not included in return or assessed before 1 April 2014

• “When this section applies

  “(1) This section applies when a person—

  • “(a) derives an amount from a foreign superannuation scheme as a withdrawal other than a pension or annuity, or applies for the withdrawal of such an amount, in the period beginning on 1 January 2000 and ending with 31 March 2014; and

  • “(b) does not include the withdrawal (the omitted withdrawal) in a return of income for the income year in which the amount was derived; and

  • “(c) is not assessed before 1 April 2014 for income included in the omitted withdrawal; and

  • “(d) chooses to include in a return of income for an income year (the return year) that is the 2013–14 or 2014–15 income year an amount of assessable income as relating to all omitted withdrawals from the foreign superannuation scheme.

  “Amount of income

  “(2) The person is treated as deriving, in the return year, from the omitted withdrawals an amount of assessable income (the withdrawal income) equal to 15% of the total amount of the omitted withdrawals.

  “Tax on omitted withdrawal

  “(3) The amount of the liability of the person for income tax (the withdrawal tax liability) arising from the omitted withdrawals is the difference between the person's income tax liability for the return year, with the withdrawal income included in the person's assessable income for that year, and the income tax liability that the person would have for the return year if the withdrawal income were not included in the person's assessable income for that year.

  “Relationship with law otherwise applicable to withdrawal and interest in scheme

  “(4) This section overrides—

  • “(a) section CF 3 (Withdrawals from foreign superannuation scheme):

  • “(b) for omitted withdrawals derived on or before 31 March 2014, the law that would apply in the absence of this section to the withdrawal at the time of the derivation of the withdrawal:

  • “(c) the law that would apply in the absence of this section to the person's interest in the foreign superannuation scheme for the period ending by 31 March 2014.

  “Defined in this Act: assessable income, foreign superannuation scheme, income tax, income tax liability, income year, return of income, terminal tax”.

• “(b) in the absence of this section, would have in or before the current year a total amount of income (the insurance income) under sections CB 6, CB 7, CB 12, CB 13, and CG 6 (which relate to income from certain disposals of land and from compensation for trading stock) from the consideration, compensation, or insurance for the affected property that exceeds the total amount of deductions under sections DB 23 and DB 27 (which relate to deductions for the cost or value of land) for the affected property; and”.

• “(c) plans, in the current year, to acquire property (the replacement property)—

  • “(i) replacing affected property; and

  • “(ii) meeting the requirements of subsection (4); and

  • “(iii) having a cost exceeding the total amount of deductions under sections DB 23 and DB 27 for the affected property; and”.

• “(a) for the purposes of determining the value of the replacement property for section EA 2 (Other revenue account property), the amount of the person's expenditure on the replacement property is reduced by—

  • “(i) the amount calculated by dividing the replacement cost by the total amount of deductions under sections DB 23 and DB 27 for the affected property and multiplying the result by the excess of the insurance income over the replacement cost, if the insurance income exceeds the replacement cost and the calculated amount is less than or equal to the amount of insurance income; or

  • “(ii) the amount of the excess recovery, if the insurance income does not exceed the replacement cost or is less than the amount calculated in subparagraph (i); and”.

“CZ 26 Land and buildings affected by Canterbury earthquakes—sections CB 9 to CB 12 and CB 14 overridden for Crown purchases

• Sections CB 9 to CB 12 and CB 14 (which relate to disposals within 10 years of acquisition) do not apply to a person and land or buildings purchased by the Crown from the person under section 53(1), 54, or 55 of the Canterbury Earthquake Recovery Act 2011.

  “Defined in this Act: land”.

“CZ 27 Prior bad debt deductions clawback

• “When this section applies

  “(1) This section applies when––

  • “(a) a person acquires a debt before the introduction of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Bill (the introduction day); and

  • “(b) the debt exists on the first day of the 2014–15 income year and a base price adjustment under section EW 31 (Base price adjustment formula) is not calculated for the debt in the 2014–15 income year or an earlier income year; and

  • “(c) the person has taken, in a return of income, a deduction for the debt under section DB 31 (Bad debts) for an income year that starts before the introduction day (a prior bad debt deduction); and

  • “(d) the prior bad debt deduction arose before the introduction day; and

  • “(e) the person does not have a dispute with the Commissioner on the introduction day in relation to any prior bad debt deduction for the debt.

  “Income: prior bad debt deductions clawback

  “(2) The person has an amount of income equal to the difference between their total prior bad debt deductions for the debt, and the amount of deductions that they would have had for the debt under section DB 31 for the same period of the prior bad debt deductions if section DB 31(4B), (4C), and (5B) were treated as applying on and after the first day that the person acquires the debt.

  “Defined in this Act: Commissioner, deduction, income, income year, return of income”.

“CZ 28 Transitional provision for mineral mining: previously appropriated mining expenditure

• “When this section applies

  “(1) This section applies when—

  • “(a) a mineral miner appropriates an amount of income for an income year to mining exploration expenditure or mining development expenditure; and

  • “(b) the income year precedes the 2014–15 income year; and

  • “(c) the mineral miner has a deduction under section DU 4 (Income appropriated to expenditure) and a corresponding amount of income under section CU 9 (Previous deduction for income appropriated) as those sections were immediately before the enactment of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014; and

  • “(d) as a result of the application of those sections, the mineral miner has an income tax liability for the 2014–15 income year.

  “Timing

  “(2) The mineral miner may allocate the corresponding amount of income equally to the 2014–15 and 2015–16 income years.

  “Defined in this Act: amount, deduction, income, income tax liability, income year, mineral miner, mining development expenditure, mining exploration expenditure”.

“Relationship with sections CU 2 and DU 3

• “(2B) Sections CU 2 (Treatment of mining land) and DU 3 (Acquisition of land for mining operations) override this section in relation to land or an interest in land as described in section CU 2(1)(b) that a mineral miner acquires for the purposes of their mining operations or associated mining operations.”

• “(a) the debt is a debt––

  • “(i) written off as bad in the income year:

  • “(ii) for which the debtor is released from making all remaining payments under the Insolvency Act 2006 excluding Part 5, subparts 1 and 2 of that Act, or under the Companies Act 1993, or under the laws of a country or territory other than New Zealand, and the person is required to calculate a base price adjustment by section EW 29 (When calculation of base price adjustment required) for the debt for the income year:

  • “(iii) for which the debtor is a company that is released from making all remaining payments by a deed or agreement of composition, and the person is required to calculate a base price adjustment by section EW 29 for the debt for the income year; and”.

“Face value

• “(4B) A person is allowed a deduction, under subsection (3), for a debt acquired for less than its face value, only to the extent of the consideration the person pays for acquiring the debt.

“Limited recourse

• “(4C) A person is allowed a deduction, under subsection (3), for a debt that a limited recourse arrangement relates to, only to the extent to which the amount of the debt, after applying subsection (4B), exceeds the consideration paid to the person under the limited-recourse arrangement in relation to that debt.

“Limited recourse: deduction when base price adjustment performed

• “(4D) If subsection (4C) applies for a debt (the debt), then the person is allowed a deduction, at the time that the person performs a base price adjustment for the relevant limited-recourse arrangement, equal to the positive amount calculated using the following formula:

  consideration paid to person – consideration paid by person.

“Definition of items in formula

• “(4E) In the formula,––

  • “(a) consideration paid to the person is the consideration paid to the person under the relevant limited-recourse arrangement in relation to the debt:

  • “(b) consideration paid by the person is the consideration paid by the person under the relevant limited-recourse arrangement in relation to the debt.”

“A definition

• “(5B) In this section, limited-recourse arrangement means, in relation to a debt (the debt), an arrangement that is for the person's business of dealing in or holding financial arrangements, and that provides for payment or non-payment by the person, contingent upon—

  • “(a) payment of some or all of the debt to the person:

  • “(b) failure to make payment of some or all of the debt to the person.”

• “(2) The life insurer is allowed a deduction as provided by section EY 20 (Shareholder base allowable deductions: non-participation policies) for the amount of expenditure or loss relating to the life risk component of a claim paid for the income year under a life insurance policy that is not an annuity and not a profit participation policy.”

“Subpart DU—Mineral mining expenditure

“DU 1 Mining expenditure: prospecting and exploration expenditure

• “Deduction

  “(1) A mineral miner is allowed a deduction for the following expenditure:

  • “(a) mining prospecting expenditure:

  • “(b) mining exploration expenditure, subject to sections DU 6 and DU 7.

  “Link with subpart DA

  “(2) This section supplements the general permission. The general limitations still apply.

  “Defined in this Act: deduction, general limitation, general permission, mineral miner, mining exploration expenditure, mining prospecting expenditure

“DU 2 Mining expenditure: rehabilitation expenditure

• “Deduction

  “(1) A mineral miner is allowed a deduction for mining rehabilitation expenditure.

  “Timing of deduction

  “(2) The deduction is allocated to the income year in which the mineral miner incurs the amount of mining rehabilitation expenditure.

  “Tax credit

  “(3) If a mineral miner has a net mining loss for a tax year after taking into account an amount of mining rehabilitation expenditure incurred in relation to a permit area, they may have a tax credit for the amount under section LU 1 (Tax credits for mineral miners) for the corresponding income year.

  “Link with subpart DA

  “(4) This section supplements the general permission and overrides the capital limitation. The other general limitations still apply.

  “Defined in this Act: amount, capital limitation, corresponding income year, deduction, general limitation, general permission, income year, mineral miner, mining rehabilitation expenditure, net mining loss, permit area, tax credit, tax year

“DU 3 Acquisition of land for mining operations

• “Deduction

  “(1) A mineral miner is allowed a deduction for expenditure incurred in acquiring land or an interest in land for the purposes of their mining operations or associated mining operations.

  “Exclusions

  “(2) Subsection (1) does not apply to the following expenditure:

  • “(a) expenditure incurred on or in relation to land that—

    • “(i) does not constitute a mining permit area or land adjacent to it:

    • “(ii) does not form, or is not intended to form, part of a mining permit area or land adjacent to it.

  • “(b) expenditure referred to in section DU 8(1):

  • “(c) expenditure for which the mineral miner has a deduction before disposing of the land or interest in land:

  • “(d) residual expenditure.

  “Timing of deduction

  “(3) The deduction is allocated to the income year in which the mineral miner disposes of the land or interest in land.

  “Treatment of losses on disposal of land

  “(4) If the mineral miner has a net mining loss for a tax year after taking into account the amount derived from the disposal of the land or interest in land, they may have a tax credit for the amount of the loss on disposal under section LU 1 (Tax credits for mineral miners) for the corresponding income year.

  “Link with subpart DA

  “(5) This section overrides the capital limitation. The general permission must still be satisfied and the other general limitations still apply.

  “Defined in this Act: amount, associated mining operations, capital limitation, deduction, general limitation, general permission, interest, income year, land, mineral miner, mining operations, net mining loss, permit area, residual expenditure, tax credit, tax year

“DU 4 Acquisition of mineral mining assets

• “Deduction for assets acquired before mining permits

  “(1) If a person acquires a mineral mining asset before the date on which a mining permit for the permit area to which the asset relates is obtained, they are allowed a deduction for expenditure incurred in acquiring the asset.

  “Mining development expenditure for later assets

  “(2) If a person acquires a mineral mining asset after the date on which a mining permit for the permit area to which the asset relates is obtained, the expenditure incurred in acquiring the asset is treated as mining development expenditure.

  “No application costs

  “(3) For the purposes of this section, expenditure incurred does not include the cost of an application for a mining right or mining permit.

  “Link with subpart DA

  “(4) This section overrides the capital limitation. The general permission must still be satisfied and the other general limitations still apply.

  “Defined in this Act: capital limitation, deduction, general limitation, general permission, mineral mining asset, mining development expenditure, mining permit, permit area

“DU 5 Farm-out arrangements

• “When this section applies

  “(1) This section applies when a farm-in party under a farm-out arrangement incurs farm-in expenditure that, if it were incurred by the farm-out party, would fall into 1 of the classes of mining expenditure referred to in section DU 8(1).

  “Treatment of farm-in expenditure

  “(2) The farm-in expenditure is treated as if it were the applicable class of mining expenditure.

  “Link with subpart DA

  “(3) This section supplements the general permission and overrides the capital limitation. The other general limitations still apply.

  “Defined in this Act: capital limitation, farm-in expenditure, farm-out arrangement, general limitation, general permission

“DU 6 Deduction for certain mining expenditure spread over assumed life of mine

• “When this section applies

  “(1) This section applies when—

  • “(a) a mineral miner—

    • “(i) incurs an amount of mining development expenditure for an income year on or in relation to their mining operations or associated mining operations in a mining permit area:

    • “(ii) has incurred an amount of mining exploration expenditure in relation to a mining permit area on acquiring or creating property for which the mineral miner has been allowed a deduction in an earlier income year, and the amount is recovered as income under section CU 4 (Recovery of certain expenditure); and

  • “(b) the mineral miner starts to use the mining permit area to derive income; and

  • “(c) the mineral miner either does not meet the requirements to allow allocation of the expenditure under section EJ 20E (Certain mining expenditure spread on basis of units of production) or, if they do, they do not choose to allocate the expenditure under that section.

  “No deduction (with exception)

  “(2) The mineral miner is denied a deduction for the expenditure except to the extent quantified and allocated under section EJ 20B (Certain mining expenditure spread over assumed life of mine).

  “Link with subpart DA

  “(3) This section overrides the capital limitation. The general permission must still be satisfied and the other general limitations still apply.

  “Defined in this Act: amount, associated mining operations, capital limitation, deduction, general limitation, general permission, income, income year, mineral miner, mining development expenditure, mining exploration expenditure, mining operations, permit area

“DU 7 Deduction for certain mining expenditure spread on basis of units of production

• “When this section applies

  “(1) This section applies when a mineral miner—

  • “(a) incurs expenditure described in section DU 6(1)(a) on or in relation to their mining operations or associated mining operations in a mining permit area; and

  • “(b) starts to use the permit area to derive income; and

  • “(c) either—

    • “(i) uses IFRS rules to prepare their financial statements; or

    • “(ii) keeps appropriate records that are sufficient to enable the Commissioner to verify the calculations used by the mineral miner; and

  • “(d) chooses to apply this section in the way described in section EJ 20E(2) (Certain mining expenditure spread on basis of units of production).

  “No deduction (with exception)

  “(2) The mineral miner is denied a deduction for the expenditure except to the extent quantified and allocated under section EJ 20E.

  “Link with subpart DA

  “(3) This section overrides the capital limitation. The general permission must still be satisfied and the other general limitations still apply.

  “Defined in this Act: associated mining operations, capital limitation, Commissioner, deduction, financial statement, general limitation, general permission, IFRS, income, mineral miner, mining operations, permit area

“Classes of mining expenditure

“DU 8 Classes of mineral mining expenditure

• “Classes

  “(1) Sections DU 9 to DU 12 set out the classes of mineral mining expenditure. They are—

  • “(a) mining prospecting expenditure, see section DU 9:

  • “(b) mining exploration expenditure, see section DU 10:

  • “(c) mining development expenditure, see section DU 11:

  • “(d) mining rehabilitation expenditure, see section DU 12.

  “No recharacterisation as mining prospecting expenditure

  “(2) For the purposes of this subpart, subpart CU (Income from mineral mining), sections EJ 20B to EJ 20E (which relate to spreading rules for certain mining expenditure), GB 20 (Arrangements involving petroleum and mineral mining), IA 7(7), IS 1, and IS 2 (which relate to tax losses), and LU 1 (Tax credits for mineral miners), no amount of expenditure that properly falls into a class of expenditure referred to in subsection (1)(b) to (d) may be characterised as mining prospecting expenditure because of the timing of the expenditure or for any other reason.

  “Defined in this Act: amount, mining development expenditure, mining exploration expenditure, mining prospecting expenditure, mining rehabilitation expenditure

“DU 9 Some definitions

• “Meaning of mining prospecting expenditure

  “(1) Mining prospecting expenditure—

  • “(a) means expenditure that a mineral miner incurs directly in relation to the acquisition of—

    • “(i) a prospecting right under the Crown Minerals Act 1991:

    • “(ii) mining prospecting information, including labour, materials, services, and administrative expenses directly incurred in acquiring the information; and

  • “(b) includes prospecting for minerals by electrical, geochemical, gravimetric, magnetic, radioactive, seismic, or other geological methods; and

  • “(c) does not include—

    • “(i) the cost of land, plant, or machinery:

    • “(ii) expenditure referred to in section DU 8(1)(b) to (d):

    • “(iii) residual expenditure.

  “Meaning of mining prospecting information

  “(2) Mining prospecting information means geological, geophysical, or technical information—

  • “(a) that is about the presence, absence, extent, or volume of listed industrial minerals in an area; or

  • “(b) that is likely to assist in determining the presence, absence, extent, or volume of listed industrial minerals in an area.

  “Defined in this Act: land, listed industrial mineral, mineral miner, mining prospecting expenditure, mining prospecting information, residual expenditure

“DU 10 Meaning of mining exploration expenditure

• Mining exploration expenditure—

  • “(a) means expenditure that a mineral miner incurs in exploring or searching in New Zealand for a listed industrial mineral; and

  • “(b) includes expenditure that the mineral miner incurs directly in relation to—

    • “(i) acquiring an exploration right or permit under the Crown Minerals Act 1991:

    • “(ii) geological mapping and geophysical surveys:

    • “(iii) systematic searches for areas containing listed industrial minerals:

    • “(iv) searching by drilling in areas containing listed industrial minerals:

    • “(v) searching for ore containing a listed industrial mineral within or in the vicinity of an ore body by crosscuts, drilling, drives, rises, shafts, or winzes; and

  • “(c) does not include—

    • “(i) the cost of land, plant, or machinery:

    • “(ii) expenditure referred to in section DU 8(1)(a), (c), and (d):

    • “(iii) residual expenditure.

  “Defined in this Act: land, listed industrial mineral, mineral miner, mining exploration expenditure, residual expenditure

“DU 11 Meaning of mining development expenditure: exclusion of operational expenditure

• “Meaning of mining development expenditure

  “(1) Mining development expenditure means—

  • “(a) expenditure that a mineral miner incurs in preparing a permit area for their mining operations or associated mining operations:

  • “(b) expenditure on operations that are carried on by a mineral miner on a permit area in New Zealand for the purpose of deriving income and consist of—

    • “(i) mining for 1 or more listed industrial mineral; or

    • “(ii) performing work directly related to mining for 1 or more listed industrial mineral; or

    • “(iii) undertaking earthworks, including tailing dams, that are necessary for the working of the mine.

  “Inclusions

  “(2) Mining development expenditure includes expenditure that the mineral miner incurs directly in relation to the permit area in—

  • “(a) acquiring a mining right or permit under the Crown Minerals Act 1991 for their mining operations or associated mining operations:

  • “(b) obtaining required resource consents for their mining operations or associated mining operations:

  • “(c) establishing mine infrastructure on any of the following:

    • “(i) plant or machinery, including vehicles or vessels:

    • “(ii) production equipment or facilities:

    • “(iii) storage facilities:

  • “(d) providing, or contributing to the cost of providing, communication equipment, fuel, light, power, or water in relation to their mining operations or associated mining operations in the permit area.

  “Exclusions

  “(3) Mining development expenditure does not include—

  • “(a) the cost of land:

  • “(b) operational expenditure:

  • “(c) expenditure on property acquired after the start of commercial production from the permit area that has an estimated useful life that does not depend on the remaining assumed life of the mine:

  • “(d) expenditure referred to in section DU 8(1)(a), (b), and (d):

  • “(e) residual expenditure.

  “Meaning of operational expenditure

  “(4) For the purposes of this section and section IS 2(1) (Treatment of net losses resulting from certain expenditure), operational expenditure means expenditure that—

  • “(a) is incurred in operations carried on by a mineral miner in a mining permit area; and

  • “(b) is incurred after the start of commercial production from the mining permit area; and

  • “(c) does not create an asset that has an estimated useful life of more than 1 year.

  “Defined in this Act: associated mining operations, commercial production, estimated useful life, income, land, listed industrial mineral, mineral miner, mining development expenditure, mining operations, New Zealand, operational expenditure, permit area, residual expenditure

“DU 12 Meaning of mining rehabilitation expenditure

• Mining rehabilitation expenditure—

  • “(a) means expenditure that a mineral miner incurs in New Zealand directly in relation to rehabilitation of land that is the permit area of their mining operations or associated mining operations carried out as a result of—

    • “(i) the mineral miner's permit requirements:

    • “(ii) the requirements of an access arrangement issued under the Crown Minerals Act 1991 or regulations made under that Act:

    • “(iii) an obligation of the mineral miner under the Resource Management Act 1991 or regulations made under that Act:

    • “(iv) a concession under the Conservation Act 1987:

    • “(v) an authority under the Historic Places Act 1993; and

  • “(b) includes an amount that the mineral miner pays to restore, or towards restoring, the area of their operations either during or after those operations; and

  • “(c) does not include—

    • “(i) the cost of land:

    • “(ii) expenditure referred to in section DU 8(1)(a) to (c):

    • “(iii) residual expenditure.

  “Defined in this Act: amount, associated mining operations, land, mineral miner, mining operations, New Zealand, pay, permit area, residual expenditure”.

“Contracts transferred to insurer

• “(4B) If a person (the transferor) transfers a general insurance contract (the contract) to the insurer by a transfer to which section ED 3(1B) (Part-year tax calculations for transfers: general insurance OCR) applies, the amount of the item opening outstanding claims reserve for the contract under subsection (4) for the insurer is the amount calculated using the formula—

  unreported claim events + reported claims unpaid + risk margin.

“Definition of items in formula in subsection (4B)

• “(4C) In the formula in subsection (4B),—

  • “(a) unreported claim events is the actuarially determined estimate of the present value of claims, not reported to the transferor before the transfer, for events occurring before the transfer,—

    • “(i) taking into account the probability of the claims being paid and the future expenses for administering the claims; and

    • “(ii) after subtracting the present value of relevant reinsurance claims of the insurer:

  • “(b) reported claims unpaid is the actuarially determined estimate of the present value of the claims reported to the transferor before the transfer and not paid before the transfer,—

    • “(i) taking into account the probability of the claims being paid and the future expenses for administering the claims; and

    • “(ii) after subtracting the present value of relevant reinsurance claims of the insurer:

  • “(c) risk margin is the appropriate margin for claims described in paragraph (a) or (b), to the extent to which the margin—

    • “(i) is actuarially determined; and

    • “(ii) reflects the uncertainty of the estimates arising from the use of the relevant best estimate assumptions; and

    • “(iii) is not already included in the risk components of the claims.”

“DZ 20 Expenditure incurred while income-earning activity interrupted by Canterbury earthquake)

• “When this section applies

  “(1) This section applies for a person and an income year (the current year) before the 2019–20 income year when—

  • “(a) the person has an income-earning activity in greater Christchurch (as defined in section 4 of the Canterbury Earthquake Recovery Act 2011) immediately before a Canterbury earthquake (as defined in that section); and

  • “(b) the activity is interrupted for a period (the period of interruption) as a result of the Canterbury earthquake; and

  • “(c) in the current year, during the period of interruption, the person incurs expenditure or loss (the interruption expenditure) in meeting an obligation relating to the income-earning activity; and

  • “(d) the interruption expenditure does not meet the requirements of the general permission for the person and the income-earning activity but would do so but for the interruption; and

  • “(e) the person resumes the income-earning activity in an income year (the resumption year) before the 2019–20 income year.

  “Deduction for interruption expenditure

  “(2) The person is allowed a deduction for the interruption expenditure.

  “Timing of deduction

  “(3) The deduction is allocated to the resumption year.

  “Link with subpart DA

  “(4) This section supplements the general permission; the general limitations still apply.

  “Defined in this Act: deduction, general limitation, general permission, income, income year, loss”.

• “(fb) property that arises as a result of mining development expenditure or mining exploration expenditure to which sections EJ 20B to EJ 20E (which relate to mineral mining) apply:”.

• “(gb) property that arises as a result of mining development expenditure or mining exploration expenditure to which sections EJ 20B to EJ 20E (which relate to mineral mining) apply:”.

• “(1) This section applies when a person (the transferor) transfers general insurance contracts to another person (the transferee) in an income year and sections CR 4 and DW 4 (which relate to outstanding claims reserves) apply to either or both of the transferor and transferee.”

“Transfer from non-resident

• “(1B) If sections CR 4 and DW 4 apply to the transferee and not to the transferor, the transferee—

  • “(a) does the calculations that the transferor would be required to perform under this section if sections CR 4 and DW 4 applied to the transferor; and

  • “(b) uses the results of the calculations in the way required under this section for a transferee.”

“Compensation derived when item no longer owned

• “(4) If, in the absence of this subsection, the person would derive the amount of insurance, indemnity, or compensation after ceasing to own the item, the person is treated as deriving the amount immediately before the person ceases to own the item.”

“Mineral mining

“EJ 20B Certain mining expenditure spread over assumed life of mine

• “When this section applies

  “(1) This section applies for the purposes of section DU 6 (Deduction for certain mining expenditure spread over assumed life of mine) when a mineral miner—

  • “(a) incurs an amount of mining development expenditure or mining exploration expenditure as described in that section; and

  • “(b) starts to use the mining permit area to derive income; and

  • “(c) either does not meet the requirements to allow allocation of the expenditure under section EJ 20E or, if they do, they do not choose to allocate the expenditure under that section.

  “Spreading rule

  “(2) The mineral miner is allowed a deduction for an income year that falls within the spreading period referred to in section EJ 20C calculated using the formula—

  rate × value.

  “Definition of items in formula

  “(3) The items in the formula are defined in subsections (4) and (5).

  “Rate

  “(4) Rate is—

  • “(a) the straight-line rate set out in schedule 12, column 2 (Old banded rates of depreciation) that is nearest to the rate calculated for the expenditure using the formula in section EJ 20D(2), if the mineral miner chooses to use the straight-line method:

  • “(b) the diminishing value rate set out in schedule 12, column 1 that corresponds to the straight-line rate under paragraph (a), if the mineral miner chooses to use the diminishing value method.

  “Value

  “(5) Value is—

  • “(a) the adjusted tax value of the expenditure, if the mineral miner chooses to use the straight-line method:

  • “(b) the diminished value of the expenditure for the income year, if the mineral miner chooses to use the diminishing value method.

  “Allocation to mines

  “(6 ) For the purposes of this section, a mineral miner may allocate expenditure for an income year under this section in relation to a mine rather than in relation to a mining permit area, but only if—

  • “(a) the mineral miner uses IFRS rules to prepare their financial statements; and

  • “(b) the allocation is permitted for the purposes of their statements.

  “Defined in this Act: adjusted tax value, amount, deduction, diminishing value method, diminishing value rate, financial statements, IFRS, mineral miner, mining development expenditure, mining exploration expenditure, permit area, straight-line method, straight-line rate

“EJ 20C Length of spreading period

• “When this section applies

  “(1) This section applies for the purposes of section EJ 20B(3) to determine the length of the spreading period for certain mining expenditure of a mineral miner related to a mining permit area.

  “Start and end dates

  “(2) The spreading period is the number of income years that represents the assumed life of the mine referred to in section EJ 20D that comprises the mining permit area,—

  • “(a) starting from the later of—

    • “(i) the first day of the income year in which the mineral miner's commercial production of a listed industrial mineral from the mining permit area starts; or

    • “(ii) the first day of the income year in which the expenditure is incurred; and

  • “(b) ending on the last day of the income year in which the expiry of the assumed life of the mine occurs.

  “Defined in this Act: commercial production, income year, listed industrial mineral, mineral miner, permit area

“EJ 20D Measurement of assumed life of mine and application to rate

• “When this section applies

  “(1) This section applies for the purposes of section EJ 20B(4)(a) for the item rate in the formula that determines the amount of the deduction a mineral miner is allowed for an income year that falls in the spreading period described in section EJ 20C.

  “Formula for straight-line rate

  “(2) The formula for the straight-line rate is—

  100%

  assumed life.

  “Definition of item in formula

  “(3) In the formula, assumed life, for an amount of expenditure and an income year, is the period that the mineral miner chooses that—

  • “(a) is not less than the period that—

    • “(i) the mineral miner uses for accounting purposes as the amortisation period for the mining permit area; or

    • “(ii) for a mineral miner that is not required to use an amortisation period for their accounts, the mineral miner estimates is a reasonable period for the commercial production of a listed industrial mineral from the mining permit area; and

  • “(b) is not more than 25 years from the later of—

    • “(i) the date on which commercial production from the mining permit area starts; and

    • “(ii) the date on which the mineral miner incurs the expenditure relating to the mining permit area.

  “Reassessment of life of mine

  “(4) A mineral miner must reassess the assumed life of the mine for the purposes of this section and sections DU 11 (Meaning of mining development expenditure) and EJ 20C. A reassessment must be made at the end of an income year that falls within the period, and applies from the start of the next income year for all remaining income years in the period in relation to all outstanding expenditure for which no deduction has yet been allowed.

  “Defined in this Act: commercial production, deduction, income year, listed industrial mineral, mineral miner, permit area, straight-line rate

“EJ 20E Certain mining expenditure spread on basis of units of production

• “When this section applies

  “(1) This section applies for the purposes of section DU 7 (Deduction for certain mining expenditure spread on basis of units of production) when a mineral miner—

  • “(a) incurs expenditure described in section DU 6(1)(a) (Deduction for certain mining expenditure spread over assumed life of mine) on or in relation to their mining operations or associated mining operations in a mining permit area; and

  • “(b) starts to use the permit area to derive income; and

  • “(c) either—

    • “(i) uses IFRS rules to prepare their financial statements; or

    • “(ii) keeps appropriate records that are sufficient to enable the Commissioner to verify the calculations used by the mineral miner; and

  • “(d) chooses to apply this section in the way described in subsection (2).

  “Election

  “(2) The mineral miner may make an election to apply this section in relation to the permit area in a return of income for an income year that is the first year in which the miner's commercial production of a listed industrial mineral from the mining permit area starts. The election is irrevocable and applies only to expenditure referred to in subsection (1)(a).

  “Reserve depletion method

  “(3) The deduction for the expenditure incurred by the mineral miner and allocated to an income year is calculated using the formula—

  (reserve expenditure — previous expenditure)		×	reserve depletion for the year
  			proven and probable reserves.

  “Definition of items in formula

  “(4) In the formula,—

  • “(a) reserve expenditure is the total mining development expenditure for the permit area for the income year and earlier income years to which this section applies:

  • “(b) previous expenditure is the total expenditure for the permit area that has been allocated to an earlier income year to which this section applied:

  • “(c) reserve depletion for the year is the amount of a listed industrial mineral produced from the permit area for the income year:

  • “(d) proven and probable reserves is the amount of the proven ore reserves and probable ore reserves of the listed industrial mineral for the permit area as set out in the reserve statement for the area, provided the reserve statement is prepared in accordance with a classification code recognised for the purposes of estimating reserves and resources under the Crown Minerals (Minerals other than Petroleum) Regulations 2007.

  “Appropriate units of measure

  “(5) In subsection (4)(c) and (d), the amount must be expressed in an appropriate unit of measure as set out in the mineral miner's reserve statement, and must be the same measure used in the formula for the items defined in those paragraphs.

  “Mines and mining permit areas

  “(6) For the purposes of this section, a mineral miner may allocate expenditure for an income year under this section in relation to a mine rather than in relation to a mining permit area, but only if—

  • “(a) the mineral miner uses IFRS rules to prepare their financial statements; and

  • “(b) the allocation in relation to the mine is permitted for the purposes of those statements.

  “Transitional provision for existing mines

  “(7) Despite subsection (2), a mineral miner may make an election to apply this section in relation to an existing permit area for the 2014–15 income year. The election is irrevocable and applies to expenditure incurred by the mineral miner in the permit area for the income year and later income years.

  “Defined in this Act: amount, associated mining operations, commercial production, Commissioner, deduction, financial statements, general permission, IFRS, income, income year, listed industrial mineral, mineral miner, mining development expenditure, mining operations, permit area, return of income”.

• “(ac) if the financial arrangement is an interest-free loan, no amount is allocated to equity or to profit or loss when the loan is initially entered into, and no interest is allocated subsequent to the initial entry:

• “(ad) if the financial arrangement is a loan with a fair value (the loan initial value) when the loan is initially entered into that, because of the loan's interest rate, is less than the face value (the consideration initial value) at that time, then no amount is allocated to equity or to profit or loss, to the extent to which the amount relates solely to the difference, because of interest rates, between the consideration initial value and the loan initial value. Also, no interest is allocated subsequent to the initial entry on account of a movement in the fair value of the loan, to the extent to which the movement relates solely to the difference, because of interest rates, between the consideration initial value and the loan initial value:”.

“Category 2: FIF superannuation interest

• “(3) The second category is a FIF superannuation interest, held as a beneficiary or a member.”

“EX 42B Interests in foreign superannuation scheme other than FIF superannuation interests

• A person's right to benefit from a foreign superannuation scheme as a beneficiary or a member is not an attributing interest in the foreign superannuation scheme if the right is not a FIF superannuation interest for the person.

  “Defined in this Act: attributing interest, FIF superannuation interest, foreign superannuation scheme”.

“Part-year calculations for transfers: application

• “(3B) Subsections (3C) to (5) apply where a life insurer (the transferor) transfers life insurance business to another life insurer (the transferee) and sections EY 23 to EY 27 apply to either or both of the transferor and transferee.

“Part-year calculations for transfers: when non-resident transferor

• “(3C) If sections EY 23 to EY 27 apply to the transferee but not to the transferor, the transferee—

  • “(a) does the calculations that would be required under this section for the transferor if sections EY 23 to EY 27 applied to the transferor; and

  • “(b) uses the results of the calculations in the way required under this section for a transferee.”

“Class of policies transferred to insurer

• “(4B) If a class of policies (the class) is transferred by a transferor to whom sections EY 23 to EY 27 do not apply to a life insurer (the insurer) to whom sections EY 23 to EY 27 apply, the opening value of the reserve amounts for the class under sections EY 23 to EY 27 for the insurer is the closing value that the reserve amounts would have for the transferor if sections EY 23 to EY 27 applied to the transferor.”

• “(1) For an income year, a life insurer's income is included as their policyholder base income if it—

  • “(a) relates to life insurance policies that are savings product policies and not profit participation policies; and

  • “(b) does not relate to life risk components of premiums and claims; and

  • “(c) is not a premium; and

  • “(d) is included in the amount of policyholder base income calculated under subsection (2) or (4).”

• “(c) is not a premium, or is a premium relating to income that is treated under subsection (5) as not relating to life risk components of premiums and claims; and”.

investment		×		average surrender value		+		de minimis amounts.
				average savings assets

• “(a) investment is the amount of income that meets the requirements of subsection (1)(a) to (c), other than income included in the item de minimis amounts:”.

• “(d) de minimis amounts is the amount of income meeting the requirements of subsection (1)(a) to (c) that would be treated as relating to life risk components of premiums and life reinsurance claims in the absence of subsection (5).”

• “(1) For an income year, a life insurer's deduction is included as their policyholder allowable deduction if it—

  • “(a) relates to life insurance policies that are savings product policies and not profit participation policies; and

  • “(b) relates to income meeting the requirements of section EY 15(1)(a) to (c); and

  • “(c) is included in the amount of policyholder base allowable deduction calculated under subsection (2).”

• “(2) If a deduction meets the requirements of subsection (1)(a) and (b), the amount of the deduction that is policyholder base allowable deduction is calculated using the basis for apportionment in—

  • “(a) section EY 15(2) and (3) with necessary modifications; or

  • “(b) section EY 15(4) with necessary modifications.”

• “(db) is income relating to annuities that would meet the requirements of section EY 15(1)(a) to (c) if the annuities were treated as being savings product policies:”.

• “(d) is a deduction that—

  • “(i) relates to income that is included in the item investment in the formula in section EY 15(2) or meets the requirements of section EY 19(1)(db); and

  • “(ii) is not included in the life insurer's policyholder base allowable deduction under section EY 16:”.