The petroleum resource rent tax (PRRT) deductions cap is now law and will take effect from 1 July 2023. If your business is involved in petroleum projects that produce liquefied natural gas (LNG), you need to know how the deductions cap applies to you and what specific conditions you need to meet.
If the cap applies to you, you'll have a taxable profit of 10% of the assessable receipts you derive from the project in the relevant year of tax. This effectively limits deductible expenditure to 90% of the project’s assessable receipts in that tax year.
You can carry forward the amounts that you can't deduct due to the cap, and uplift them at the Government long-term bond rate.
Projects won't be subject to the cap until 7 years after the year of first production or 1 July 2023, whichever is later.
To find out more about the change, see PRRT deductions cap.
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