Petroleum Resource Rent Tax Assessment Amendment Act 2012 (18 of 2012)

Schedule 3   Deductible expenditure

Petroleum Resource Rent Tax Assessment Act 1987

14   After section 35B

Insert:

35C Resource tax expenditure

(1) For the purposes of this Act, a reference to the resource tax expenditure incurred by a person in a financial year in relation to a petroleum project (not being a combined project) is a reference to the sum of:

(a) any amount of resource tax expenditure actually incurred by the person in relation to the project in the financial year; and

(b) any amount that is taken by subsection (5) or Division 5 to be resource tax expenditure incurred by the person in relation to the project in the financial year.

(2) For the purposes of this Act, a reference to the resource tax expenditure incurred by a person in a financial year in relation to a combined project is a reference to the sum of:

(a) any amount of resource tax expenditure actually incurred by the person in relation to the project in the financial year (not being expenditure incurred before the project combination certificate in relation to the project came into force); and

(b) any amount that is taken by subsection (5) or Division 5 to be resource tax expenditure incurred by the person in relation to the project in the financial year; and

(c) if the financial year is the year in which the project combination certificate in relation to the project came into force - any amount of resource tax expenditure, or any amount that is taken by subsection (5) or Division 5 to be resource tax expenditure, incurred by the person in relation to the pre-combination projects in the financial year.

(3) For the purposes of subsections (1) or (2), a reference to resource tax expenditure incurred by a person in a financial year in relation to a petroleum project is a reference to resource tax expenditure incurred by the person in the year to the extent the expenditure:

(a) is incurred in relation to petroleum recovered, on or after 1 July 2012, from the production licence area for the project; and

(b) is incurred under an Australian law (other than this Act); and

(c) is expenditure to which one of the following applies:

(i) the expenditure is a royalty, or would be a royalty if the petroleum were owned by the Commonwealth, or a State or Territory, just before the recovery of the petroleum;

(ii) the expenditure is an excise;

(iii) the expenditure is an amount calculated by reference to the revenue, expenditure or profits made or incurred by a person in relation to petroleum recovered from the production licence area for the project;

(iv) the expenditure is an amount calculated by reference to the value, at the wellhead, of petroleum recovered from the production licence area for the project.

(4) However, the amount of resource tax expenditure under subsection (3) is increased by dividing it by the rate of tax mentioned in section 5 of the Petroleum Resource Rent Tax (Imposition - General) Act 2012.

(5) For the purposes of subsection (1), (2) or (3), if the sum of the following incurred by a person in a financial year (the assessable year ) in relation to a petroleum project exceeds the assessable receipts derived by the person in the assessable year in relation to the project:

(a) the class 1 augmented bond rate general expenditure;

(b) the class 1 augmented bond rate exploration expenditure;

(c) the class 2 augmented bond rate general expenditure;

(d) the class 1 GDP factor expenditure;

(e) the class 2 augmented bond rate exploration expenditure;

(f) the class 2 GDP factor expenditure;

(g) the resource tax expenditure;

the person is taken to incur, in relation to the project and on the first day of the next financial year, an amount of resource tax expenditure worked out in accordance with the formula:

Available excess x Augmented bond rate

where:

augmented bond rate means the long term bond rate in relation to the assessable year plus 1.05.

available excess means so much of the excess as does not exceed the resource tax expenditure incurred in the assessable year.

(6) Despite subsection (3), if a person (the eligible person ) incurs a liability to make a payment to procure expenditure of a kind mentioned in subsection (3) by another person, then the expenditure is taken to have been incurred by the eligible person, and not by the other person, to the extent of the liability.