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Newfoundland Regulation 1998 Mining and Mineral Rights Tax Regulations, 1998 (Filed
February 16, 1998) Under the
authority of section 34 of the Mining and
Mineral Rights Tax Act, the Lieutenant-Governor in Council makes the following
regulations. Dated at John R.
Cummings REGULATIONS Analysis 1. Short
title 2. Definitions 3. Designation
as a new mining operation or major expansion project 4. Depreciation
expenses 5. Non
deductible expenses 6. Application
of Quarry Materials Act 7. Tax
returns 8. Interest
on sum due 9. Refund
of overpayment 10. Interest
on refund 11. Repeal 12. Commencement Short title 1. These regulations may be cited as
the Mining and Mineral Rights Tax
Regulations, 1998. Definitions 2. In these regulations (a) "Act"
means the Mining and Mineral Rights Tax
Act; (b) "capital
cost" means, in respect of an asset, (i) the cost of the acquisition, construction or betterment of that
asset, excluding interest charges and less direct or indirect grants, subsidies
or incentives pertaining to that asset, and (ii) costs incurred to withdraw an asset from use or service and place
it in protective storage or to keep it in reserve for future use; (c) "class
1 assets" means processing and smelting assets; (d) "class
2 assets" means mining assets which are not class 3 assets; (e) "class
3 assets" means mining assets used in new mining operations or a major
expansion project; (f) "major expansion project" means a project designated by
the minister as a major expansion project under subsection 3(5); (g) "mining
asset" means an asset used in mining operations; (h) "new
mining operation" means a mining operation designated as a new mining
operation by the minister under subsection 3(3); and (i) "undepreciated capital cost" means, in respect of a class
of assets for a fiscal year, (i) the undepreciated capital cost of all assets in that class in the
previous year less depreciation expenses claimed in that year, plus (ii) 50% of the capital cost of all assets in that class acquired in the
previous year, plus (iii) 50% of the capital cost of all assets in that class acquired in the
current year, less (iv) the amounts determined under paragraphs 5(3)(a) and (b) of the Act. Designation as a new mining operation or major expansion project 3. (1) An operator may apply to the
minister to have a mining operation designated as a new mining operation, or to
have a project to expand a mining operation designated as a major expansion
project. (2) An
application under subsection (1) shall contain the information which the
minister may require. (3) A
mining operation may be designated by the minister as a new mining operation
where the mine is separate and distinct geologically and has no common workings
with another mine and is (a) a
new mine; or (b) a
re-opened mine which has been closed down for a continuous period of at least
60 months. (4) A
new mining operation ceases to be a new mining operation when the mining
operation achieves commercial production. (5) A
project to expand the rate of production of a mining operation may be
designated by the minister as a "major expansion project" where the
investment in the project is designed to increase the daily rate of production
by at least 30% over the average daily rate of production of the mining
operation during each of the 5 fiscal years ending immediately before the
calendar year in which the first outlay of capital is made in respect of the
project. (6) Where
the operator fails to increase the daily rate of production as referred to in
subsection (5) within 3 years of incurring the first outlay of capital for the
project, or by another time that the minister considers reasonable, the
minister may revoke the designation. (7) Where
a designation which has been revoked under subsection (6), assets which have
been classified as class 3 assets shall be reclassified as class 2 assets
effective from the date of their acquisition, and the minister may reassess a
tax payable for the fiscal years for which the designation was revoked. Depreciation expenses 4. (1) For the purpose of determining
the net income of a taxpayer, the following depreciation expenses may be deducted
from gross income: (a) in
respect of class 1 assets, up to 25% of the undepreciated capital cost; (b) in
respect of class 2 assets, up to 25% of the undepreciated capital cost; and (c) in
respect of class 3 assets, up to 100% of the undepreciated capital cost. (2) Where
the fiscal year of an operator is less than 12 months, the depreciation expense
under subsection (1) shall be reduced by the number of days in the fiscal year
divided by 365. Non deductible expenses 5. (1) The following disbursements,
expenditures or payments shall not be deductible in determining net income: (a) taxes
imposed upon income and capital which are paid to the province or another
jurisdiction; (b) tax
imposed under this Act; (c) legal
or professional fees incurred in respect of an objection or an appeal in
respect of an assessment or reassessment of a tax referred to in paragraph (a)
or (b); (d) depreciation,
other than as specified in section 4; (e) depletion
or exhaustion; (f) exploration and pre-production expenditures, other than as
specified in paragraph 5(1)(c) of the Act; (g) interest,
dividends and all other costs of financing including the acquisition and
maintenance of equity financing; (h) charitable
donations; (i) a loss or expense recoverable under an insurance policy; (j) amounts transferred or credited to a reserve, other than as
specified in paragraph 5(1)(e) of the Act; (k) social
and recreational costs; (l) the cost of capital assets; (m) rentals,
royalties and similar payments paid by the taxpayer to a person, other than the
Crown under an agreement, grant, lease or licence for the right to engage in
mining operations; (n) costs
incurred to withdraw an asset from use or service and place it in protective
storage or to keep in reserve for future use; and (o) costs
incurred for incorporation, organization or reorganization. (2) Where
an operator incurs an expense or pays a fee to obtain or acquire a property or
service, and the expense or fee was paid or is payable to a person with whom
the operator was not dealing at arm's length, the minister may fix an amount
based upon the actual costs incurred by that person not including a profit,
gain, or commission to that person or to another party with whom that person or
the operator was not dealing at arm's length, and the amount, when fixed, shall
be considered to be the expense or fee paid or payable for the property or
service for the purpose of determining the amount deductible by the operator. Application of Quarry Materials Act 6. (1) Where an operator excavates a
total of less than 250,000 cubic metres of quarry materials per year in mining
operations and is subject to the Quarry
Materials Act and liable to pay royalties under that Act, that person is
exempt from the payment of all taxes imposed by this Act in respect of those
quarry materials. (2) Notwithstanding
subsection (1), in a fiscal year that an operator described in subsection (1)
excavates more than 250,000 cubic metres of quarry materials, that operator
shall be subject to the tax under this Act for that fiscal year and each
succeeding fiscal year. Tax returns 7. (1) An operator shall file an
annual tax return in the form prescribed by the minister. (2) A
person who receives or is due a payment described under subsection 9(1) of the
Act shall file an annual return in the form prescribed by the minister. (3) A
return required under this section shall be filed with the minister not later
than 3 months after the close of the fiscal year for which the return is made,
together with payment of the tax payable. (4) In
addition to or instead of returns required under this section, the minister may
order a person to file a return in the form, for the period and within the time
that the minister may specify and that person shall file the return together
with the tax payable for the period in respect of which the return is made. Interest on sum due 8. (1) Interest shall be levied upon a
sum due to the Crown under the Act and these regulations at the rate of 1.2%
compounded per month or part of a month from the date the sum is required to be
paid to the date of payment. (2) Interest
shall not be levied for a month in which the sum due is less than $100. Refund of overpayment 9. (1) Where a person has paid to the
Crown an amount which exceeds the amount required to be paid, that person may
apply in writing to the minister for a refund of the overpayment. (2) An
application for a refund shall be supported by the relevant facts,
documentation or information that the minister may request. (3) Upon
verification of an application for a refund, the minister shall pay the
verified amount of overpayment to the person to whom the refund is due. (4) A
refund shall not be paid under this section where the amount of the refund is
less than $10. Interest on refund 10. (1) Where the minister issues a
refund under section 9, he or she shall at the same time pay interest on the
amount of the refund at the rate of 0.7% compounded per month from the date the
application is received to the date the refund is approved. (2) Where
the minister issues a refund of tax resulting from a review or appeal of an
assessment, interest shall be paid to the taxpayer at the rate specified in
subsection (1) from the date that the assessment or part of the assessment was
paid to the date the refund is approved. (3) Interest
shall not be paid under this section when the amount of the refund is less than
$100. Repeal 11. The
Mining and Mineral Rights Tax Regulations,
Newfoundland Regulation 1146/96, are repealed. Commencement 12. These
regulations are considered to have come into force 12 months prior to their
publication in the Gazette. ©Earl G. Tucker, Queen's Printer |