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RESEARCH ARTICLE (Non peer reviewed)
Contents Vol 52 (Conference Proceedings)

Petroleum Resource Rent Tax: an update on recent developments

I. Crisp
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Ernst & Young.

The APPEA Journal 52(2) 654-654 https://doi.org/10.1071/AJ11068
Published: 2012

Abstract

Although the Petroleum Resource Rent Tax (PRRT) has been operating for longer than 20 years, the past few years have seen a significant amount of activity on this front:

  1. The announcement by the Australian government, on 2 July 2010, to expand the existing PRRTto include onshore oil and gas projects, including coal seam gas projects and the North West Shelf Project.

  2. The release of three ATO draft taxation rulings in 2010 about the pre-conditions for the deductibility of project expenditure, excluded expenditure (including indirect administration expenses) and the treatment of expenditure paid under ‘sub-contractor’ arrangements.

  3. The courts’ decisions about the treatment of contract payments and the application of the PRRT taxing point.

This extended abstract explores these developments as they apply to existing and new PRRT taxpayers, and identify the key issues that oil and gas companies will need to be aware of as they continue or commence compliance with the PRRT. This extended abstract also explores the impacts of these developments on transaction structuring, due diligence, financial modelling, and fiscal certainty in the broader context of asset portfolios.

Ian Crisp has more than 25 years of experience in advising oil and gas companies and their service providers about Australian taxation and PRRT matters.

While his career has mainly been in a professional services environment, he has also spent time as the Australian tax manager for a multinational oil and gas corporation.

His experience includes the provision of tax and PRRT advice about structuring inbound investments, mergers and acquisitions, and advice about farm-ins and farm-outs.

References

Esso Australia Resources Pty Ltd v The Commissioner of Taxation [2011] FCA 360 and Esso Australia Resources Pty Ltd v The Commissioner of Taxation [2011] FCAFC 154.

Esso Australia Resources Pty Ltd v The Commissioner of Taxation [2011] FACA 565 and Esso Australia Resources Pty Ltd v Commissioner of Taxation [2012] FCAFC 5.