As of 1 July 2014, mineral royalty collection is now the responsibility of the Office of State Revenue.
By now all royalty clients would have received a letter signed by the Chief Commissioner of State Revenue and the Executive Director Mineral Resources stating the responsibilities of both agencies.
The Office of State Revenue are responsible for collection, compliance and debt management functions. Trade & Investment retain the functions of royalty education and policy, data collections, illegal mining and private mineral ownership. Ongoing joint activities between the Office of State Revenue and Trade & Investment include compliance audits.
Mineral resources in New South Wales are mostly owned by the Crown.
This means that the royalties and economic benefits from mining contribute to the provision of services to the people of New South Wales.
It is the role of NSW Trade & Investment, through the Royalty and Statistics Unit, to administer the legislation relating to mineral royalty, disburse royalty to private mineral owners and maintain a mining statistics database.
In 2013-14 the royalty revenue generated by the NSW minerals sector was $1.32 billion, with coal accounting for approximately 93% of the total.
The collection of mining royalties is based on 'self assessment', which means it is the responsibility of the mining lease holder to calculate and promptly lodge all royalty returns. To ensure royalty leaseholders comply, audits are undertaken annually.
Mining royalties in NSW are payable on minerals, which are divided into coal royalties, mineral (non-coal) royalties, and petroleum royalties.
Lease holders are required to lodge monthly returns and payment on or before the 21st day of each month following extraction of coal. Annual returns must be lodged on or before 31 July each year.
For information on how to complete a Royalty and Statistics Return for coal operations contact the Royalty and Statistics Unit.
Royalties are levied on all coal recovered in New South Wales, and two types of coal royalties apply:
- Ad Valorem Royalty
- Coal Reject Royalty
Ad Valorem royalty
Royalty for coal is charged as a percentage of the value of production (total revenue less allowable deductions).
The coal ad valorem royalty rates are 6.2% for deep underground mines (coal extracted below 400 metres), 7.2% for underground mines and 8.2% for open cut mines. (Royalty Compliance guidelines are available for download from the section below.)
Coal reject royalty
Royalty is payable if the coal reject is used or disposed of for the purpose of producing energy.
Coal reject is defined as a by-product of the mining or processing of coal that has energy value of less than 16 gigajoules per dry tonne or contains more than 35% ash by dry weight.
The rate of royalty on coal in coal reject is no more than half the rate applicable to coal.
Currently, royalty is payable at the rate of 10% of the 'well-head value' of the petroleum. The well head is the point where the petroleum reaches the surface and the 'well-head value' is the revenue less certain expenses incurred downstream of the well head.
Royalty is payable monthly by the end of the following month.
Mineral (non-coal) royalties
The date of lodgement of annual returns and payment of royalty for all mineral (non-coal) minerals is 31 July for the preceding financial year for producers with an annual royalty liability of less than $50,000.
Quarterly royalty returns and installments are required for producers with an annual royalty liability greater than $50,000. The due dates are 30 April, 31 July, 31 October, and 31 January.
For information on how to complete a Royalty and Statistics Return for mineral (non-coal) operations contact the Royalty and Statistics Unit. Royalty Compliance guidelines are available for download from the section below.
Two separate types of mineral (non-coal) royalty exist:
Quantum royalty is levied at a flat rate per unit of quantity. The rate of royalty is dependent on the mineral being extracted and is generally utilised for low value to volume minerals such as gypsum limestone, and clays.
Ad Valorem royalty
Ad valorem royalty is applied to high value to volume minerals. Ad valorem royalties are levied as a percentage of the total value of minerals recovered, or the ex-mine value.
The ex-mine value refers to the value of the mineral once it is mined and brought to the surface. In some cases the costs associated with the processing or treatment may be allowable deductions.
However, the costs associated with exploration, development and mining of the ore body and the rehabilitation of the site are not allowable deductions.
The base rate applicable for ad valorem minerals is 4% of 'ex-mine' value. Ad valorem royalty is applied to high value to volume minerals.
Royalties on privately owned minerals
Where royalty is collected on minerals not owned by the Crown legislation requires that 7/8th or 87.5% of the royalty collected is paid to the private mineral owner.
An online function for entering monthly returns for coal and petroleum and quarterly returns for mineral (non-coal) will be progressively rolled out to clients shortly.
Guidelines for this service are available for download from section below: