Net Current Proceeds Tax for Coal & Other Mines
While you’re recovering the capital invested in your mine, you pay 2% tax on your mine’s net current proceeds (NCP). To track the recovery of your capital, your annual net current proceeds are deducted from your Cumulative Expenditure Account (CEA). You pay 2% tax as long as your CEA has a balance. When you don’t have a balance in your CEA you must pay Net Revenue Tax.
How to Calculate
To calculate your net current proceeds, take your gross revenue and deduct your current operating costs. To ensure this amount is accurate, take the net earnings shown on the mine’s financial statements and:
- Add non-allowable expenses that were deducted on the mine's financial statements
- Deduct revenue that is exempt from Mineral Tax included on the mine's financial statements
- Deduct allowable expenditures that were not deducted as expenses on the mine's financial statements
- Add taxable revenue that was not included as revenue on the mine's financial statements
Your gross revenue includes:
• Cost recoveries from the operation of the mine
• Other current revenues from the operation of the mine
You cannot include gains and losses from commodity or currency hedging in your gross revenue.
In addition to specific rules about what can and cannot be included as an operating cost, there are three general criteria. Operating costs must be:
- Incurred by an operator of the mine
- Incurred for the purpose of earning revenue from the operation of the mine
- Reasonable in amount