Australia Releases Draft Petroleum Tax Reforms

by Mary Swire, Tax-News.com, Hong Kong

30 August 2011

The Australian Treasury has released for public comment draft legislation for the extension of the Petroleum Resource Rent Tax (PRRT).

According to the government, the resource taxation reforms are aimed at ensuring Australians receive a fairer return from the development of their non-renewable resources and will allow tax to be cut for businesses that are not in the resource boom "fast lane".

The government announced last year the extension of the PRRT to all Australian onshore and offshore oil and gas projects, including the North West Shelf, as part of plans to spread the opportunities and benefits of the boom to more Australians.

Under the Petroleum Resource Rent Tax Act 1987, the PRRT is defined as a tax "levied on a person in a financial year in relation to a petroleum project at a rate of 40% of the taxable profit. That is the profit after all eligible expenses incurred by the person have been deducted from the assessable receipts derived."

“We thank the petroleum industry, tax professionals and other stakeholders who have engaged in consultations for their constructive contributions. We encourage all stakeholders, including coal seam gas producers, to make submissions to inform the final design of the legislation,” a joint statement from Wayne Swan, Treasurer, and Martin Ferguson, Minister for Resources and Energy, said.

“We also thank the Resource Tax Implementation Group, which comprises representatives of industry, the tax profession and government officials, for their assistance to date on the legislation.”

The government is continuing to work with industry and tax professionals to ensure that the PRRT and the Minerals Resource Rent Tax (MRRT) are administered in an efficient and transparent manner, with a particular focus on issues confronting small companies.

The Treasury will release the second exposure draft legislation on the MRRT in the near future.

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