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Mining as a business?

Just wandering how many claim owners are running the claim as a taxable business? My accountant has advised me that I can claim all my machinery and general running costs ect and the purchase price of the claim. Essentially the “business” will run at a loss unless I sell a shit load of gold.
Thoughts?

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Personally if your not paying tax on your gold now. I wouldn’t go down this path. I’ve been there done that in other enterprise’s. They get it back off you when you want out. But I was accessed as being "Recklessly conservative " by the investment advisors at the time

My uncle was a pioneer of the modern dredging gold mining and began sixty or so years ago.
In about 1970 he asked me if I was going to sell gold then to pay tax on it and I asked him why. He said that he always paid tax on what he sold and ran his hobby as a business. He stated that he did extremely well out of paying tax because he could claim back on running costs and a host of other things.
Oh yes did I say that he was an Accountant and chief Tax Inspector for the Inland Revenue Department? He knew the ropes and I guess that although things have changed now the principle ideas remain the same.
I would suggest discussing it with a good accountant and getting his advice.

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Thanks, what you have written is kind of what my accountant told me, equipment is worth a lot of money so can easily be deprecated over a few years through the business plus gst ect. After purchasing claims and machinery you can be looking at $50,000+ It may take a few years or more to find that much gold so losses keep the tax bill down, it just seems kind of a logical step.

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This is food for thought

MMMMmm, $50,0000+ a year is a very average wage these days. Dredging full time is not as rosy as it may appear at face value. Lots of pit falls that consume both time & money that erode into making a living. Guess it depends on what you consider making a living & what your overheads are & to still be able to survive. More so as you get older. The gold isn’t there like it used to be as you will just be getting the crumbs from those who have been there before you. You may come across the odd virgin crack & crevice but they will be very few & far between. Certainly isn’t profitable to mine your claim from bank to bank for its entire length.
When does looking for gold become dull? When you go from it being a hobby to a full time living that most likely wont pay too well at the end of the day.
Just my thoughts though but I think they are very realistic.

Good luck though

JW :cowboy_hat_face:

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I agree with you. Dredging is great but I think doing it full time would make it not very enjoyable.

You got like what your doing at the end of the day.

Plus if your Dredging on your own it wears you down after awhile. Dredging with another you get more done as your Co operating but you got to share the gold and have a partner you trust underwater etc No selfish pricks.

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Gavzilla I reckon your accountant is correct.
The “loss” of your depreciation and cash cost, will effectively reduce any tax you need to pay elsewhere. So if you have a taxed paye job or another business - you can use the “loss” to offset income there and reduce tax payable. All kosher.

Even if right now you don’t have another taxable income stream to benefit from the “loss” (effectively reduce the amount of tax you will have to pay), you can carry the imputation credits forward until you do - well pretty sure thats the case - check with your accountant on that.

Back in the day I had shares in a few racehorses - and it worked this way, they never made any money just sucked cash, but the loss I made on them offset my tax on proper earnings - so I paid less tax on my other income. I was going to own them anyway for the fun.

The negative is the cost of time and $ for your accountant to set it all up and manage etc. although the accountants fees are again - tax deductible.

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All valid points there but Im happy with 50k after expenses. When does looking for gold become dull? When does building, trapping coons, packin out deer, or driving a truck become dull?
Dredging for gold is just another shitkicker job but better than some. I only work 60% of the year due to dirty water so factor that in. Just my thoughts.

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One to remember is your acc levies dictate your injury cover .so if you declare fuk all ,you get fuk all if you break your arm etc. Do it gav . I’m 1 year into this hobby and already looking for a way to convert to a fulltime gig , i basically run my tradee business at a loss but we have so much free time it outweighs what you don’t earn ,because if your a true kiwi an can spin spanners, weld, plan and produce ,you save thousands in repairs maintenance etc over what a city slicker would have to pay for there way of living . My opinion anyway. Whitebait ,gold ,firewood . All there waiting to be harvested. Lots of ways to make a living in the mainland .

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hi kiwijw well said in your comment i have a very strong passion for all things gold … prospecting/dredging /highbanking and realise the importance of not running yourself flat by over doing it and loosing the passion . i had a similar thing happen to me with flying paragliders i was very passionate about flying and made it my income / a proffesional paraglider pilot i did very well money wise for decades but slowly it took my passion to fly solo away from me i had been warned about this and that it had happened to many proffessional pilots but thought it would never happen to me but it did so reading your comment brought home some very real truths about going from something you love as a hobby to making it a full time living so i say well said mate…!!

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I think you may of confused the way I intended on going John, like Elliot mentioned it’s more of a tax offset against other business type venture. In no way will it be full time, just a hobby but as it’s a potential source of income dredges/detectors/diggers can all be deprecated through my business to reduce costs.

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I wonder how many gold miners that treat it as a business, whether it is a hobby business or full time business to claim all expenses, actually honestly declare a pay tax on all the gold they find & sell. I bet not many if any.

JW :cowboy_hat_face:

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