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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.
††††††† 1.†† Short title
††††††† 2.†† Definitions
††††††† 3.†† Designation as a new
††††††††††††† mining operation or
††††††††††††† major expansion
††††††† 4.†† Depreciation expenses
††††††† 5.†† Non deductible expenses
††††††† 6.†† Application of Quarry Materials
††††††† 7.†† Tax returns
††††††† 8.†† Interest on sum due
††††††† 9.†† Refund of overpayment
††††† 10.†† Interest on refund
††††† 11.†† Repeal
††††† 12.†† Commencement
††††††† 1. These regulations may be cited as the Mining and Mineral Rights Tax Regulations, 1998.
††††††† 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.
††††††† 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 armís 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 armís 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.
††††††† 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.
††††† 11. The Mining and Mineral Rights Tax Regulations, Newfoundland Regulation 1146/96, are repealed.
††††† 12. These regulations are considered to have come into force 12 months prior to their publication in the Gazette.
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