WHAT ARE PROSPECTING EXPENSES?

Prospecting expenses are expenditure incurred by a miner (other than that which is allowable under the general deduction formula) on operations, either in search of mining claims or for minerals after a mining claim has been pegged. Such expenditure is allowable in the year of assessment in which it is incurred and, in the absence of income from such operations, such expenditure may be set off against other income from trade or investment.

ARE PROSPECTING EXPENSES ALLOWABLE AS A DEDUCTION?

Prospecting expenses are an allowable deduction according to section 15(2) (f) (ii) of the Income Tax Act.

WHAT ARE THE CONDITIONS OF CARRYING FORWARD PROSPECTING EXPENSES?

A prospector who later intends to eventually carry on mining operations may elect that prospecting expenditure incurred be carried forward and be allowed only against income from mining operations. If mining operations were to fail to materialize, deductibility of the prospecting expenditure would have been lost. The election is binding for any year of assessment for which it is made but not for any subsequent year.

WHICH EXPENDITURE IS ALLOWABLE UNDER SECTION 15(2) (f) (ii)?

The expenditure may take the form of surveys, sinking of boreholes, digging of trenches and pits, and other prospecting and exploratory works undertaken for the purposes of acquiring rights to mine minerals or incurred on a mining location in Zimbabwe. This section excludes expenditure allowable as a deduction under Section 15(2) (f) (i).

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Disclaimer

This article was compiled by the Zimbabwe Revenue Authority (ZIMRA) for information purposes only. ZIMRA shall not accept responsibility for loss or damage arising from use of material in this article and no liability will attach to the Zimbabwe Revenue Authority.