PETROLEUM RESOURCE RENT TAX ASSESSMENT REGULATIONS 2005 (REPEALED)

PART 5 - THE RESIDUAL PRICING METHOD  

Division 5.3 - Allocating capital costs to years of tax  

REGULATION 36   ALLOCATING CAPITAL COSTS TO A YEAR OF TAX  

36(1)    
For Step 10 of the residual pricing method, this regulation applies to an included capital cost for the taxpayer (the capital cost ) that was incurred in a year of tax (the cost year ) in relation to a unit of property (the unit ) and has, if appropriate, been augmented or reduced under regulation 34 or 35 .

36(2)    
The annual allocation for the capital cost is allocated to the cost year and to each subsequent year of tax during the remainder of the expected life of the unit.

36(3)    
If the expected operating life of the unit is 15 years or less, the annual allocation for the capital cost is:

Capital cost × Capital allowance 1 − (1 + Capital allowance) -N

where:

Capital allowance
is the capital allowance for the cost year (regulation 13 ).

N
is the number of calendar years in the expected operating life of the unit.

36(4)    
If the expected operating life of the unit is more than 15 years, the annual allocation for the capital cost is:

Capital cost × Capital allowance

where:

Capital allowance
is the capital allowance for the cost year (regulation 13 ).

36(5)    
If, at the end of the assessment year, the expected operating life of the unit has changed since the end of the cost year:

(a) the annual allocation of the capital cost for the assessment year is calculated using the new expected operating life of the unit; and

(b) the annual allocations of the capital cost for the calculation of RPM prices for years before the change are unaffected.

36(6)    
For this regulation, the expected operating life of the unit is the period of N calendar years between:

(a) the start date for the capital cost; and

(b) the 31 December of the last year of tax that is within the expected operating life of the operation and during which the unit of property is expected to be used for the operation.

36(7)    
For this regulation, a cost that is a capital cost only because of subparagraph 31(1)(b)(i) is taken to have been incurred in relation to a unit of property that has an expected operating life that is the expected operating life of the operation.