Business rescue in mining: Peter van den Steen (VSquared)Werksmans Attorneys
Weitere ähnliche Inhalte
Ähnlich wie The Mineral and Petroleum Resources Royalty Act, 28 of 2008 and the Mineral and Petroleum Resources Royalty Administration Act: Advocate Leon J Bekker
Ähnlich wie The Mineral and Petroleum Resources Royalty Act, 28 of 2008 and the Mineral and Petroleum Resources Royalty Administration Act: Advocate Leon J Bekker (14)
TDP As the Party of Hope For AP Youth Under N Chandrababu Naidu’s Leadership
The Mineral and Petroleum Resources Royalty Act, 28 of 2008 and the Mineral and Petroleum Resources Royalty Administration Act: Advocate Leon J Bekker
1. THE MINERAL AND PETROLEUM RESOURCES
ROYALTY ACT, 28 of 2008
&
THE MINERAL AND PETROLEUM RESOURCES
ROYALTY (ADMINISTRATION) ACT, 2008
By: Adv. Leon J Bekker
2. INTRODUCTION
The Royalty Act
is intended to impose a royalty on the transfer of mineral
resources
The Royalty Administration Act
provides for the registration of persons liable to pay a royalty
under the Royalty Act and the administration in connection
therewith.
Originally intended to come into operation on 1 May 2009 (the
day on which conversions have to be completed) but was
postponed to 31 March 2010 – However, registration
commenced 1 November 2009.
31 Adv Leon J Bekker
3. DEFINITION OF “MINERAL RESOURCES”
Mineral resources:
A mineral or petroleum defined in s1 of the MPRDA regardless
whether it undergoes processing or manufacturing.
Material in mine dumps mined before conversion of rights - does not occur
naturally in on or under the earth.Therefore, not a mineral resource.
After conversion material in residue deposits or residue stockpiles does form part
of mineral resources.
Attempt to amend the MPRDA to include dumps created before
MPRDA became effective.
32 Adv Leon J Bekker
4. DEFINITION OF “TRANSFER”
“Transfer” means
(a) Disposal,
(b) …
(c) Consumption, theft, destruction or loss
If not previously disposed, consumed, stolen, destroyed or lost,
Meaning of “disposed” = contractual transfer
When? – s 6 refers to received or accrued (when the extractor becomes
entitled to payment)
Meaning of “consumed” … etc. = loss of ownership without
disposal.
33 Adv Leon J Bekker
5. DEFINITION OF “REFINED / UNREFINED”
Schedule I = refined / Schedule II unrefined
Refined
Listed only in sch I; or
Listed in sch 1 and sch II and refined to or beyond the condition described in sch I
Unrefined
Listed only in sch II; or
Listed in sch 1 and sch II and not refined to or beyond the condition described in sch I
Refined / unrefined determines which subsection in s6 applies to gross
sales to be taken into account upon transfer of the mineral resource
34 Adv Leon J Bekker
6. IMPOSITION OF ROYALTY
Section 2
Person (not registered or holder)
Includes unlawful mining
Previously : wins or recovers a mineral resource from within
the Republic in respect of the transfer thereof …
Imported ore?
Now (after amendment) transfer of a mineral resource
extracted from within the republic.
35 Adv Leon J Bekker
7. DETERMINATION OF ROYALTY
Section 3
multiply gross sales (s6) with percentage determined in terms of
Refined mineral resource – formula in s4(1)
Unrefined mineral resource – formula in s4(2)
Section 4(1) – refined
.5 + [EBIT/(gross sales i.r.o refined x 12.5)] x 100 but maximum of
5%
Section 4(2) – unrefined
.5 + [EBIT/(gross sales i.r.o unrefined x 9)] x 100 but maximum of
7%
36 Adv Leon J Bekker
8. EARNINGS BEFORE INTEREST AND TAXES
EBIT (section 5(1))
gross sales (s6)
plus recoupments (i.t.o s8(4) of Income Tax Act)
less expenditure incurred to win, recover or develop the mineral resource to the
condition specified in sch I or sch II as the case may be.
Composite mineral resources - Section 5(4)
Concept of “value” introduced (what does that mean?)
Expenditure does not include
Financial instruments
Royalty
Transport, insurance or handling after refining
37 Adv Leon J Bekker
9. GROSS SALES
Section 6(1) (refined) or 6(2) (unrefined).
(a) disposed in the specified condition
Amount received or accrued
s6(4) amount not determinable (what if determinable before return?)
(b) disposed in a condition other than specified
Amount that would be received in case of an arm’s length sale in specified condition
(c) stolen, lost, consumed etc.
Amount that would be received in case of an arm’s length sale in specified condition
Deemed revenue on date of transfer.
During the year of assessment
When is the resource “consumed”?
38 Adv Leon J Bekker
10. New section 6A
How to apply Schedule II:
(a) where there is a range of values
Transferred below minimum level:
Treated as having been transferred at minimum condition
Transferred above minimum level:
Treated as having been transferred at higher of-
o Minimum condition
o Condition at which it was extracted
(b) where concentrate consisting of more than one mineral is disposed of
& price determined with reference to one of the minerals in the
concentrate:
Specified condition of other mineral in the concentrate must not be taken into
account for purposes of Schedule II.
39 Adv Leon J Bekker
11. ROLL OVER RELIEF FOR TRANSFERS
BETWEEN EXTRACTORS
Section 8A
Transfer of a mineral resource between 2 extractors that are both
registered for Royalty
Agree in writing that s 8A will apply to transfer
Transferor exempt from royalty
Transferee treated as the person who wins or recovers the mineral
resource;
Section 8A does not apply if transferee registered voluntarily (s 2(c)
of the Admin Act)
40 Adv Leon J Bekker
12. REGISTRATION (SECTION 2 OF REGISTRATION ACT)
Who must register?
Holder of rights
Person who “holds” a lease (must both lessor & lessee register?)
Person who wins or recovers from within RSA
Contractor?
Unlawful extraction?
Person who elects to register
When must a person register?
Person who qualifies on 1 November 2009 – register before 31 January 2010
Person who qualifies for 1st time after that date – register within 60 days of
qualifying.
41 Adv Leon J Bekker
13. Royalty in Joint Ventures
Unincorporated body of Persons (Admin Act s4)
One or more of them holds rights or leases of rights in the name of JV;
All of the members elects in writing that the JV be regarded as a person
for purposes of the Act
Consists of 2 or more persons
Section 10 of the Royalty Act Applies (JV regarded as extractor
separately from members)
Deemed transfer on date of election to register or unregister JV (s 10(3)
and (4))
Members of JV jointly and severally liable for royalty (s 4(4) of Admin
Act)
42 Adv Leon J Bekker
14. Records to be kept (section 8 of
Administration Act)
Gross sales
EBIT
Deemed amounts received or accrued
Quaintly of minerals extracted and not transferred with sufficient
detail to identify the extracted and transferred minerals (tailings)
Books (ledger, cash book, journal, cheque book etc)
Retain for 5 years after return submitted.
43 Adv Leon J Bekker
15. Assessments
Commissioner may issue an assessment
Not more than 5 years after date of submission of return.
Assessment may include an estimate of royalty
Objection within 30 days
Pay now argue later applicable
Assessment may be reduced or withdrawn
Failure to pay –
penalties - 20%
Interest – prescribed rate
44 Adv Leon J Bekker
17. 'mineral' means any substance, whether in solid, liquid or gaseous form,
occurring naturally in or on the earth or in or under water and which
was formed by or subjected to a geological process, and includes sand,
stone, rock, gravel, clay, soil and any mineral occurring in residue
stockpiles or in residue deposits, but excludes-
(a) water, other than water taken from land or sea for the extraction of
any mineral from such water;
(b) petroleum; or
(c) peat;
Back to slide
46 Adv Leon J Bekker
18. 2 Imposition of royalty
Previously
A person that wins or recovers a mineral resource from within the Republic
must pay a royalty for the benefit of the National Revenue Fund in respect of
the transfer of that mineral resource.
Amended Section:
A person must pay a royalty for the benefit of the National Revenue Fund in
respect of the transfer of a mineral resource extracted from within the
Republic.
Back to slide
47 Adv Leon J Bekker
19. 5 Earnings before interest and taxes
(1) … “earnings before interest and taxes” in respect of a year of assessment means the aggregate of—
(a) the gross sales of the extractor during that year in respect of refined (or unrefined) mineral resources; and
(plus)
(b) so much of the amount allowed to be deducted from income in terms of the Income Tax Act (whether in
that year or a previous year of assessment) in respect of the use of assets, or expenditure incurred, in respect
of mineral resources transferred on or after 1 March 2010 to win, recover and develop those mineral
resources to the condition specified in Schedule 1 (or schedule 2), as is included in the income of the
extractor during that year of assessment—
(i) as a recoupment in terms of any provision of that Act; or
(ii) in terms of paragraph (j) of the definition of “gross income” in section 1 of
that Act,
less any amount which in terms of that Act—
(i) is deductible from the income of the extractor during any year of assessment in respect of assets used or
expenditure incurred to win, recover and develop those refined mineral resources to the condition
specified in Schedule 1 (or Schedule 2) for those mineral resources; or
(ii) would have been deductible from the income of the extractor during any year of assessment in respect of
assets used or expenditure incurred to win, recover and develop those refined mineral resources had
those mineral resources been developed to the condition specified in Schedule 1 (or schedule 2) for
those mineral resources.
Back to slide
48 Adv Leon J Bekker
20. section5(4) (a) For purposes of determining 'earnings before interest and taxes' in the
case of a composite of refined mineral resources and unrefined mineral resources, the
refined and unrefined proportions of the composite mineral resource must be
determined in accordance with a method of reasonable apportionment that is
consistently applied.
(b) For purposes of determining 'earnings before interest and taxes', if the value of the
refined proportion of a composite mineral resource as determined in terms of
subsection (1) does not exceed 10 per cent of the total value of that composite mineral
resource, that composite mineral resource may be treated solely as an unrefined
mineral resource, and if the value of the unrefined proportion of a composite mineral
resource as so determined does not exceed 10 per cent of the total value of that
composite mineral resource, that composite mineral resource may be treated solely as
a refined mineral resource
Back to slide
49 Adv Leon J Bekker