A public ruling, when issued, is the published view of the Commissioner of State Revenue (the Commissioner) on the particular topic to which it relates. It therefore replaces and overrides any existing private rulings, memoranda, manuals and advice provided by the Commissioner in respect of the issue(s) it addresses.
Where a change in legislation or case law (the law) affects the content of a public ruling, the change in the law overrides the public ruling—that is, the Commissioner will determine the tax liability or eligibility for a concession, grant or exemption, as the case may be, in accordance with the law.
Concentrate | Prescribed mineral | Standard |
---|---|---|
Copper | Copper (x% contained) | The lower of:
|
Silver (x grams per tonne) | (x – 30 grams) × 0.9 | |
Gold (x grams per tonne) | (x – 1 gram) × 0.9 | |
Lead | Lead (x% contained) | The lower of:
|
Silver (x grams per tonne) | (x – 100 grams) × 0.95 | |
Gold | No deduction | |
Zinc | Zinc (x% contained) | The lower of:
|
Silver (x grams per tonne) | (x – 100 grams) × 0.6 | |
Lead, zinc, silver
(bulk concentrate) |
Lead (x% contained) | The lower of:
|
Zinc (x% contained) | The lower of:
|
|
Silver (x grams per tonne) | (x – 100 grams) × 0.9 |
less any freight or insurance costs payable by the producer and relating to the transport of the mineral by water to a port outside Queensland14, with:
Scenario | Description | Gross value |
---|---|---|
1 |
For example:
|
The sum of:
|
2 |
For example, Company A mines and sells copper to Company B (an arms-length third party) in exchange for a cash payment and a transfer of mining equipment from Company B. |
The sum of:
|
3 |
|
The sum of:
|
4 |
|
The sum of:
|
5 |
|
The sum of:
|
6 |
|
The sum of:
|
7 | None of the above scenarios apply. | The sum of:
|
Example 1
During a return period, XYZ Pty Ltd (XYZ) sells a total of 20 tonnes of tungsten ore to an unrelated party, ABC Pty Ltd (ABC), for $25,000 a tonne. A gross value royalty decision does not apply to these sales.
During the period, XYZ and ABC settle an existing commercial dispute on the basis that XYZ will pay ABC $50,000.
XYZ and ABC agree to offset the $50,000 settlement payment by XYZ against the $500,000 payable by ABC. Accordingly, ABC will only pay XYZ $450,000 for the tungsten purchased during the period.
ABC ultimately only pays XYZ $150,000 before ABC is wound up.
Despite the settlement agreement and the underpayment by ABC, the gross value of the tungsten for royalty purposes is $500,000.
Scenario | Description | Content loss deduction |
---|---|---|
1 |
|
An amount equal to the contractual metal difference multiplied by the gross value per unit of contained metal |
2 |
|
An amount equal to the standard metal difference multiplied by the gross value per unit of contained metal, or such other amount determined by the Commissioner on application by the producer |
3 |
|
An amount equal to the contractual metal difference multiplied by the gross value per unit of contained metal |
4 |
|
An amount equal to the standard metal difference multiplied by the gross value per unit of contained metal, or such other amount determined by the Commissioner on application by the producer |
5 | None of the above scenarios apply. | The amount determined by the Commissioner on application by the producer |
Example 2
On 1 December 2020, XYZ Pty Ltd (XYZ) sells 100 dry metric tonnes of copper concentrate containing 28% copper and 5 grams per tonne of gold to ABC Pty Ltd (ABC). ABC is not a relevant entity of XYZ. Under the sale contract, ABC agrees to pay XYZ for:
The exchange rate on 1 December 2020 and at the time of payment by ABC on 31 December 2020 is A$1.00 = US$0.80.
No gross value royalty decision applies in respect of the sale of the concentrate. The payable quantities for copper and gold under the contract are not adjusted on account of refining or treatment charges.
Copper
The contained quantity for copper in the concentrate is 28 tonnes (28% × 100 tonnes). The gross value for copper is therefore A$196,000 (28 tonnes × US$5,600 per tonne x (1 ÷ 0.8)), or A$7,000 per tonne.
The payable quantity for copper in the concentrate is 27.16 tonnes (28% × 100 tonnes × 97%).
The standard quantity for copper in the concentrate is 27 tonnes (27% (i.e. the lesser of 27% (28% – 1%) and 27.02% (28% × 0.965)) × 100 tonnes).
As the payable quantity is greater than the standard quantity, the content loss deduction is A$5,880 (the contractual metal difference of 0.84 tonnes (i.e. 28 tonnes – 27.16 tonnes) × gross value of A$7,000 per tonne of contained copper).
Gold
The contained quantity for gold in the concentrate is 500 grams (5 grams per tonne × 100 tonnes). The gross value for gold is therefore A$38,580 (500 grams × US$61.73 per gram × (1 ÷ 0.8)), or $77.16 per gram.
The payable quantity for gold in the concentrate is 300 grams (5 grams per tonne × 100 tonnes x 60%).
The standard quantity for gold in the concentrate is 360 grams (((5 grams – 1 gram) × 0.9) × 100 tonnes).
The payable quantity is 83.33% of the standard quantity (300 grams ÷ 360 grams).
Accordingly, the content loss deduction allowed is A$10,802.40 (the standard metal difference of 140 grams (i.e. 500 grams – 360 grams) × gross value of A$77.16 per gram of contained gold) unless, on application by XYZ, the Commissioner determines a different deduction.
Example 3
Same facts as example 2, except ABC agrees to pay XYZ for 80% of the contained gold.
The payable quantity for gold in the concentrate is 400 grams (5 grams per tonne × 100 tonnes × 80%).
As the payable quantity is greater than the standard quantity of 360 grams, the content loss deduction is A$7,716 (the contractual metal difference of 100 grams (i.e. 500 grams – 400 grams) × gross value of A$77.16 per gram of contained gold).
or
Mineral | Minimum metal content | Royalty reduction percentage |
---|---|---|
Cobalt | 50% | 20% |
Copper | 95% | 20% |
Iron ore | 95% | 20% |
Lead | 95% | 25% |
Manganese | 75% | 35% |
Molybdenum | 56% | 20% |
Nickel | 70% | 20% |
Tantalum | 95% | 35% |
Tungsten | 89% | 20% |
Zinc | 95% | 35% |
then, subject to paragraph 54, royalty on the mineral must be accounted for as follows (the adjustment method):
and
and
Mark Jackson
Commissioner of State Revenue
Date of issue: 1 October 2020
Public Ruling | Issued | Dates of effect | |
---|---|---|---|
From | To | ||
MRA002.1 | 1 October 2020 | 1 October 2020 | Current |
On 1 December 2020, XYZ Pty Ltd (XYZ) sells 100 dry metric tonnes of copper concentrate containing 28% copper and 5 grams per tonne of gold to ABC Pty Ltd (ABC). ABC is not a relevant entity of XYZ. Under the sale contract, ABC agrees to pay XYZ for 97% of the contained copper and 80% of the contained gold.
No gross value royalty decision applies in respect of the sale of the concentrate, and XYZ does not incur any marine costs in relation to the sale. XYZ has previously exhausted the royalty-free threshold for 2020–21 in relation to sales of copper in the September 2020 quarter. The payable quantities for copper and gold under the contract are not adjusted on account of refining or treatment charges.
A provisional invoice is raised on 1 December 2020, reflecting:
The exchange rate on 1 December 2020 is A$1.00 = US$0.80.
Payment of the provisional invoice of 90% is made by ABC on 28 December 2020. The exchange rate on that date is A$1.00 = US$0.78.
The final invoice is paid on 16 February 2021, reflecting:
The exchange rate on 16 February 2021 is A$1.00 = US$0.82.
The royalty rates for the December 2020 quarter are:
Commodity | December 2020 rate |
---|---|
Copper | 3.38% |
Gold | 5% |
Subsequent to sale of the concentrate by XYZ, the copper is processed in Queensland to a minimum metal content of 96%.
As the actual gross value of the copper cannot be worked out before 29 January 2021 (i.e. the day that the return for the December 2020 quarter is required to be lodged), the royalty for the December 2020 return period must be calculated using the assumed gross value (as reflected in the provisional invoice). In doing so, the fact that only 90% of the provisional invoice has been paid when the return is lodged is disregarded (other than in relation to determining a change in the assumed gross value due to exchange rate differences).
The royalty payable for copper for the December 2020 quarter is therefore calculated as follows.
Assumed gross value at invoice date (1 December 2020), based on US$5,600/tonne63 | 196,000 |
Add change in assumed gross value due to exchange rate difference between 1 December 2020 and 28 December 202064 | 4,523.08 |
Assumed gross value | 200,523.08 |
Less assumed content loss deduction (based on assumed gross value)65 | 5,880.00 |
Value | 194,643.08 |
Royalty rate for December 2020 quarter | 3.38% |
Royalty before processing discount | 6,578.94 |
Less processing discount (20% of royalty) | 1,315.79 |
Provisional royalty (payable in December 2020 quarter return) | $5,263.15 |
The royalty payable for copper for the March 2021 quarter is calculated as follows.
Actual gross value, based on US$5,900/tonne66 | 206,500.00 |
Add change in gross value due to exchange rate difference between 1 December 2020 and 16 February 202167 | (5,036.59) |
Actual gross value | 201,463.41 |
Less content loss deduction (based on actual gross value)68 | 6,043.90 |
Value | 195,419.51 |
Royalty rate for December 2020 quarter | 3.38% |
Royalty before processing discount | 6,605.18 |
Less processing discount (20% of royalty) | 1,321.04 |
5,284.14 | |
Less provisional royalty | 5,263.15 |
Additional royalty (payable in March 2021 quarter return) | $20.99 |
Similarly, as the actual gross value of the gold cannot be worked out before 29 January 2021, the royalty for the December 2020 return period must be calculated using the assumed gross value as reflected in the provisional invoice. In doing so, the fact that only 90% of the provisional invoice has been paid when the return is lodged is disregarded (other than in relation to determining a change in the assumed gross value due to exchange rate differences).
The royalty payable for gold for the December 2020 quarter is therefore calculated as follows.
Assumed gross value at invoice date (1 December 2020), based on US$1,920/troy ounce69 | 38,581.25 |
Add change in assumed gross value due to exchange rate difference between 1 December 2020 and 28 December 202070 | 890.33 |
Assumed gross value | 39,471.58 |
Less assumed content loss deduction (based on assumed gross value)71 | 7,716.25 |
Value | 31,755.33 |
Royalty rate for December 2020 quarter | 5.00% |
Provisional royalty (payable in December 2020 quarter return) | $1,587.77 |
The royalty payable for gold for the March 2021 quarter is calculated as follows.
Actual gross value, based on US$1,800/troy ounce72 | 36,168.75 |
Add change in gross value due to exchange rate difference between 1 December 2020 and 16 February 202173 | (882.16) |
Actual gross value | 35,286.59 |
Less content loss deduction (based on actual gross value)74 | 7,057.32 |
Value | 28,229.27 |
Royalty rate for December 2020 quarter | 5.00% |
Royalty | 1,411.46 |
Less provisional royalty | 1,587.77 |
Reduction in royalty (offset against other royalty payable in March 2021 quarter return) | ($176.31) |