Failing to properly consider the tax consequences when negotiating mine compensation packages can have a significant impact on the taxes paid. There are three broad categories of payment types:
Payment for damage to the property and/or decline in property value
Compensation for the grant of access, easements and similar rights
Royalties and rental payments
There are different tax treatments for compensation payments that are deemed to be a payment for loss in value of a capital asset as opposed to compensation for loss of income. It is also important to consider the capital gains implications of the package.
It is best to consider these implications as early as possible in the negotiation process.
The team at Kennas has experience in dealing with mine compensation packages and will help you make the right decisions.