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GOVERNMENT CONSULTS ON REFORMING PETROLEUM RESOURCE RENT TAX

Friday, 21 July 2017

Treasury has launched another phase of consultation on reform of the Petroleum Resource Rent Tax (PRRT) at the request of the Government.

Treasury said that on 30 June 2017, Treasurer Scott Morrison announced the Government’s interim response to the Review of the PRRT undertaken by former Treasury economist Michael Callaghan.

In his interim response to the Callaghan report Mr Morrison said a key purpose of the consultation is to get industry and other comment on the main recommendations of the Callaghan report.

The Callaghan reports said the PRRT arrangements should be updated “so that they are more appropriate to the current Australian oil and gas industry. This process should be comprehensive and take into account the integrated nature of the PRRT along with likely future developments in the Australian petroleum industry. Changes to the PRRT from this process should only apply to new projects (as defined in the PRRT legislation) after a date to be specified. Areas that should be considered include:
• changing the arrangements for the uplift rates for all deductible expenditures so that they are more commensurate with the risk of losing PRRT deductions, taking into account transferability and that this risk will vary over the life of a project;
• ensuring that classes of expenditure with the highest uplifts are deducted first having regard to how deductions can compound in large, long-life projects;
• examining the rules for the transferability of deductions between projects in a company to ensure they produce a consistent set of outcomes; and
• examining the gas transfer pricing arrangements to identify possible changes that would achieve greater simplicity and transparency, ease of compliance, and fair treatment of the economic rent from each stage of an integrated petroleum operation.”

The Government has requested that Treasury undertake further consultation to inform its final response to the Review.

Treasury says all interested parties are encouraged to make a submission by Friday 28 July 2017. “The information obtained through this consultation will be used to develop options for reforming the PRRT,” the department says.

“Following the development of detailed options, further consultation is envisaged, with the consultation process concluding at the end of August.

“The Government has asked Treasury to report back by the end of September 2017”.
The Review was released by the Treasurer on 28 April 2017. Non-confidential submissions received by the Review are available on the Treasury website.

 

Click below to view source

Treasury: Options to address the design issues identified in the Petroleum Resource Rent Tax Review

Treasury: Interim Government Response to the Petroleum Resource Rent Tax

Treasury: Review of the Petroleum Resource Rent Tax (April 2017)

News.com.au: Warning against big petroleum tax changes

Australian Financial Review: PRRT operating to Australia's 'detriment'

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