Petroleum Resource Rent Tax Assessment Amendment Act 2006 (78 of 2006)
Schedule 1 Deducting transferable exploration expenditure from tax instalments
Part 1 Amendments
Petroleum Resource Rent Tax Assessment Act 1987
10 After section 98
Insert:
98A Instalment transfer interest charge - liability
Situation in which charge applies
(1) Subject to subsections (2) and (3), this section applies to a person (the liable person ) in relation to an amount of expenditure (the instalment transfer excess ) if:
(a) an instalment transfer of the amount in relation to an instalment period in a year of tax is made:
(i) by the liable person to a petroleum project under section 45A (as the section applies because of section 45E); or
(ii) to the liable person in relation to a petroleum project under section 45B (as the section applies because of section 45E); and
(b) an annual transfer, in relation to the year of tax, of the amount to the same project, or to the liable person in relation to the same project, cannot be made because of the application of clause 22 or 31 of the Schedule (whether or not there is any other reason preventing such an annual transfer).
Note 1: This section may apply separately to a person in relation to 2 or more instalment transfers in the same year of tax, even if the same instalment transfer amount is transferred between the same projects or companies by each instalment transfer (as allowed under subsection 45E(6)).
Note 2: If a transfer is made by the Commissioner under section 45C because of a failure of a person to make a transfer as required by section 45A or 45B, the transfer is taken to be a transfer by the person under section 45A or 45B (as the case requires): see subsection 45C(4).
Instalment transfer excess - offsets
(2) The amount of the instalment transfer excess (as it would be apart from this subsection), in relation to a petroleum project, is reduced by:
(a) an amount equal to so much of the excess as must be applied or transferred to reduce or eliminate any person's taxable profit in relation to any petroleum project and the year of tax; and
(b) any amount of expenditure that must be transferred, by annual transfer in relation to the year of tax, to the project, or to the liable person in relation to the project, because the excess cannot be transferred as mentioned in paragraph (1)(b).
(3) This section does not apply if the instalment transfer excess is reduced to zero (or a negative amount) by the operation of subsection (2).
Liability to pay charge
(4) The liable person is liable to pay a charge (the instalment transfer interest charge ) on the instalment transfer excess for each day in the following period (the instalment transfer charge period ) in the year of tax:
(a) if the instalment period to which the excess relates is the first instalment period in the year - the period:
(i) starting at the start of the day on which instalments of tax are due and payable for the first instalment period in the year; and
(ii) ending immediately before the day on which instalments of tax are due and payable in relation to the second instalment period in the year;
(b) if the instalment period to which the excess relates is the second instalment period in the year - the period:
(i) starting at the start of the day on which instalments of tax are due and payable for the second instalment period in the year; and
(ii) ending immediately before the day on which instalments of tax are due and payable in relation to the third instalment period in the year;
(c) if the instalment period to which the excess relates is the third instalment period in the year - the period:
(i) starting at the start of the day on which instalments of tax are due and payable for the third instalment period in the year; and
(ii) ending immediately before the day on which tax is due and payable in relation to the year of tax.
Note 1: For when instalments of tax are payable, see section 95. For when tax is payable in relation to the year of tax, see section 82.
Note 2: For the amount of the charge, see section 98B. For when the charge is payable, see section 98C. For remission of the charge, see section 98D.
Charge payable even if person has transferred interest in project
(5) Despite sections 48 and 48A, the liable person remains liable for the full amount of the instalment transfer interest charge even if the liable person enters into a transaction that has the effect, after the end of the instalment period, of transferring part or all of the liable person's entitlement to derive assessable receipts in relation to the project.
Statement about charge
(6) The liable person must, on or before the 60th day after the end of the year of tax, give the Commissioner information, in the approved form, for use in working out the instalment transfer interest charge.
Note: Subdivision 388-B in Schedule 1 to the Taxation Administration Act 1953 applies to approved forms under this section.
(7) In this section:
first instalment period , in a year of tax, means the instalment period ending at the end of September in that year.
second instalment period , in a year of tax, means the instalment period ending at the end of December in that year.
third instalment period , in a year of tax, means the instalment period ending at the end of March in that year.
98B Instalment transfer interest charge - amount
(1) The instalment transfer interest charge on an amount of instalment transfer excess, for a day in an instalment transfer charge period, is worked out by multiplying the rate worked out under subsection (2) by the sum of the following amounts:
(a) the instalment transfer tax; and
(b) the instalment transfer interest charge payable on the excess for the previous days in the instalment transfer charge period.
(2) The rate is:
Base interest rate for the day / Number of days in the calendar year
(3) In this section:
base interest rate , for a day, has the meaning given by section 8AAD of the Taxation Administration Act 1953.
instalment transfer tax is the amount worked out by multiplying the instalment transfer excess by the rate at which tax is imposed by the Petroleum Resource Rent Tax Act 1987 in relation to the year of tax in which the instalment period to which the excess relates occurred.
98C Instalment transfer interest charge - notification and payment
Notice of charge payable
(1) The Commissioner must give a liable person a notice stating the amount of instalment transfer interest charge that the liable person is liable to pay for an instalment transfer charge period.
(2) The notice may be included in any other notice given to the liable person by the Commissioner.
(3) A notice given by the Commissioner under this section is prima facie evidence of the matters stated in the notice.
Note: See also section 106.
When payment is due
(4) An amount of instalment transfer interest charge that the liable person is liable to pay is due and payable on the 21st day after the day on which the Commissioner gives the liable person notice of the amount of the charge under this section.
Note: The Commissioner may defer the time at which the charge is, or would become, due and payable: see section 255-10 in Schedule 1 to the Taxation Administration Act 1953.
98D Instalment transfer interest charge - remission
Remitting the charge
(1) The Commissioner may remit the whole or a part of an amount of instalment transfer interest charge that a liable person is liable to pay if the Commissioner considers it fair and reasonable to do so.
Reasons for not remitting
(2) The Commissioner must give the liable person a written statement of the reasons for a decision not to remit an amount of instalment transfer interest charge that the liable person is liable to pay, if the liable person requests the Commissioner, in the approved form, to remit the amount.
Note 1: Section 25D of the Acts Interpretation Act 1901 sets out rules about the contents of a statement of reasons.
Note 2: Subdivision 388-B in Schedule 1 to the Taxation Administration Act 1953 applies to approved forms under this section.
Objecting against remission decision
(3) The liable person may object, in the manner set out in Part IVC of the Taxation Administration Act 1953, against a decision of the Commissioner not to remit an amount of instalment transfer interest charge that the liable person is liable to pay.