Onshore petroleum ventures, and the offshore ventures that were previously exempted from the PRRT, will now move to the regime under measures announced by the Federal Government.
They will be taxed at the point where a marketable petroleum commodity has been sold, further processed or treated, or has been moved from its place of production.
“The PRRT approach to defining the taxing point appears to be broad enough to accommodate the different types of project, onshore and offshore, conventional and unconventional, as they will all produce one form of marketable petroleum commodity or another,” the Issues Paper said.
- In the case of LNG projects, special rules will require that one of three options be used to determine the value of the sales gas produced at the taxing point:
- the terms agreed to in an Advance Pricing Arrangement between the taxpayer and the Tax Office; or
- if this does not exist, a comparable uncontrolled price for the transaction; or
- if there is no such price, the residual pricing method in which any gap between the cost plus and netback gas prices.
Singular CSG projects will be able to obtain a combination certificate under the PRRT by the Federal Minister for Resources and Energy, while common infrastructure downstream of the taxing point such as pipelines transporting feed gas to the domestic market or an LNG facility would be unlikely to provide grounds for a combination certificate.
Other key features of the PRRT include a headline tax rate of 40 per cent, transition provisions for oil and gas projects moving into the PRRT and allowances for unutilised losses.
It has not yet been specified whether underground coal gasification and gas-to-liquids technologies will fall under the PRRT, or the Minerals Resource Rent Tax.
Feedback is now being sought on a newly-released PRRT Issues Paper, created by the Federal Government’s Policy Transition Group to cover Australian CSG and LNG export industries.
The Issues Paper included potential policies to promote exploration expenditure, such as an exploration tax offset or rebate, a flow-through shares scheme, or research and development concessions.
The Federal Government has said that it will release the draft PRRT legislation for public comment before June 2011, and introduce the legislation to Federal Parliament in late 2011.
Formal consultation with relevant stakeholders will begin in Perth next week, and the Policy Transition Group is now seeking feedback on the technical design issues associated with the implementation of the PRRT reforms.
Interested stakeholders can send formal written submissions in response to the Issues Paper to PTG@ret.gov.au, by 28 October 2010.