Senate

Explanatory Memorandum

(Circulated by authority of the Minister representing the Treasurer, Senator the Hon. Peter Walsh.)

GENERAL OUTLINE

Petroleum Resource Rent Tax Assessment Bill 1987

This Bill provides for the assessment and collection of the petroleum resource rent tax (PRRT) payable by persons in respect of certain offshore petroleum projects. The Bill -

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contains rules for determining the petroleum projects that are to be subject to PRRT;

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specifies the basis on which the PRRT liability of each participant in a petroleum project is to be calculated - broadly, the tax will apply to the excess (if any) of receipts over expenditure (capital or revenue) for a year;

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provides for any excess of expenditure over receipts for a year to be compounded forward at a specified rate for deduction against future receipts;

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identifies the receipts - or, in the case of certain petroleum products that have not been sold by the point at which they leave an on-site storage facility, amounts deemed to be receipts - that are to be assessable for PRRT purposes;

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identifies project-related expenditure that is to qualify for deduction for PRRT purposes;

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provides for the collection of PRRT by instalments payable on 21 October, 21 January and 21 April in each year, with a final payment on assessment; and

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affords rights of objection and appeal and contains general machinery provisions consistent with those in other taxation laws.

Petroleum Resource Rent Tax Bill 1987

This Bill will declare the rate of petroleum resource rent tax and formally impose the tax in respect of the taxable profit of a petroleum project determined in accordance with the accompanying Petroleum Resource Rent Tax Assessment Bill 1987. The rate of tax is to be 40%.

Petroleum Resource Rent Tax (Miscellaneous Provisions) Bill 1987

This Bill will amend various laws consequent upon the enactment of the proposed Petroleum Resource Rent Tax Assessment Act 1987. The consequential amendments will -

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ensure that the Excise Tariff Act 1921 does not apply to impose excise on petroleum produced from a project to which the proposed Petroleum Resource Rent Tax Assessment Act 1987 applies;

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ensure that the Petroleum (Submerged Lands) (Royalty) Act 1967 does not apply to impose royalties in respect of petroleum produced from a project to which the proposed Petroleum Resource Rent Tax Assessment Act 1987 applies;

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provide a deduction under the Income Tax Assessment Act 1936 for petroleum resource rent tax assessed and paid in a year of income;

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include as assessable income under the Income Tax Assessment Act 1936 any amount of petroleum resource rent tax refunded;

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extend the operation of the Crimes (Taxation Offences) Act 1980 to schemes for the evasion of petroleum resource rent tax;

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ensure that the Administrative Decisions (Judicial Review) Act 1977 does not apply to decisions related to making, or forming part of the process of making, an assessment under the proposed Petroleum Resource Rent Tax Assessment Act 1987;

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extend the operation of the Taxation (Interest on Overpayments) Act 1983 to authorise the payment of interest on certain refunds of petroleum resource rent tax;

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include petroleum resource rent tax within the categories of taxes for which a liquidator must make provision under the Fringe Benefits Tax Assessment Act 1986, the Income Tax Assessment Act 1936, the Pay-roll Tax (Territories) Assessment Act 1971, the Sales Tax Assessment Act (No. 1) 1930, the Tobacco Charges Assessment Act 1955 and the Wool Tax (Administration) Act 1964; and

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extend the list, in the Taxation Administration Act 1953, of provisions of various taxation laws dealt with in that Act to include corresponding provisions of the proposed Petroleum Resource Rent Tax Assessment Act 1987.

Petroleum Resource Rent Tax (Interest on Underpayments) Bill 1987

This Bill will formally impose the interest payable on certain underpayments of tax as determined in accordance with the accompanying Petroleum Resource Rent Tax Assessment Bill 1987.