Tax and Superannuation Laws Amendment (2013 Measures No. 1) Act 2013 (88 of 2013)

Schedule 7   Miscellaneous amendments

Part 1   Resource rent taxation

Petroleum Resource Rent Tax Assessment Act 1987

123   Section 58P

Repeal the section, substitute:

58P Single entity rule

(1) If a person:

(a) is a subsidiary member of the consolidated group or MEC group for any period in which the choice is in effect; and

(b) holds an interest in an onshore petroleum project;

the person and any other subsidiary member of the group that holds an interest in the project are taken, for the purposes covered by subsection (2), to be parts of the head company or provisional head company of the group, rather than separate persons, during that period.

Note: Despite the single entity rule, a subsidiary member of the group is jointly and severally liable for a liability of the head company: see section 721-10 of the Income Tax Assessment Act 1997.

(2) The purposes covered by this subsection are:

(a) working out, for the purposes of this Act, the head company's or provisional head company's interests, and any subsidiary member's interests, in onshore petroleum projects for any financial year in which any of the period occurs or any later financial year; and

(b) working out any tax that is payable in relation to such an interest for any such financial year; and

(c) working out assessable receipts and deductible expenditure arising in relation to such an interest for any such financial year; and

(d) working out the head company's or provisional head company's notional tax amount, and any subsidiary member's notional tax amount, in relation to an instalment period in any such financial year; and

(e) working out excess closing-down expenditure arising in relation to such an interest.

Examples: The following are some examples of consequences of the single entity rule:

(a) a subsidiary member's interest in an onshore petroleum project becomes a part of the head company's or provisional head company's aggregated interest in the project;

(b) a subsidiary member's assessable receipts and deductible expenditure relating to the interest are inherited by the head company or provisional head company along with the interest;

(c) a subsidiary member's liability to pay tax in relation to a period before becoming a member of the group (and any interest charges associated with such a liability) remains a liability of the subsidiary member and does not become a liability of the head company or provisional head company.