AUSTRALIAN DRAFT LEGISLATION TO EXTEND PETROLEUM RESOURCE RENT TAX

• Published in: Journal of International Taxation 2012-01, Vol.23 (1), p.49
• Main Authors: Anderson, Michael, Dixon, Chad, Nelson, Andrew, Finlay, Janet, Chang, Michael, Rintoul, Jonathan, Van Dinter, Andrew
• Format: Article
• Language: English
• Subjects: Capital expenditures; Corporate taxes; Court decisions; Expenditures; Exposure drafts; International taxation; Legislation; Oil shale; Petroleum industry; Petroleum production; Receipts; Tax legislation; Taxpayers; Valuation methods
• ISSN: 1049-6378

On August 26, 2011, the Australian Treasury released for public comment the exposure draft legislation for the extension of the petroleum resource rent tax (PRRT). The legislation seeks to extend the current PRRT regime to oil and gas production on the North West Shelf Project and onshore oil and gas production, including coal seam gas (CSG) and oil shale from July 1, 2012. The PRRT exposure draft legislation has implemented the Policy Transition Group (PTG)'s recommendations for a credit equivalent deduction to be available for the payment of other resource taxes. Entities that held an interest in an exploration permit, retention lease, or production license at May 2, 2010, will be entitled to a starting-base amount to take into account investments prior to July 1, 2012. A taxpayer has a choice of three starting-base valuation approaches: book value approach, market value approach, and look-back approach. The PRRT exposure draft legislation provides a short-cut valuation method for CSG projects using the market valuation method.