Tax Laws Amendment (2013 Measures No. 2) Act 2013 (124 of 2013)

Schedule 6   Petroleum resource rent tax

Petroleum Resource Rent Tax Assessment Act 1987

9   Subsection 41(1)

Repeal the subsection, substitute:

(1) If a person (the eligible person ) makes or made a payment wholly or partly to procure the carrying on or providing of operations, facilities or other things of a kind referred to in section 37, 38 or 39 by another person, then:

(a) for the purposes of this Act:

(i) the operations, facilities or other things are taken to have been carried on or provided by the eligible person and not by the other person; and

(ii) to the extent that the payment is to procure the carrying on or providing of the operations, facilities or other things - it is taken to have been made by the eligible person in carrying on or providing the operations, facilities or other things; and

(b) if subsection (1A) does not apply to the other person in relation to the payment - to the extent that the payment is to procure the carrying on or providing of the operations, facilities or other things, the payment is taken, for the purposes of sections 37, 38, 39 and 44, to have the same character and nature as the operations, facilities or other things procured; and

(c) if subsection (1A) applies to the other person in relation to the payment - to the extent that:

(i) the payment is to procure the carrying on or providing of the operations, facilities or other things; and

(ii) the payment relates to use of property on which the other person has incurred capital expenditure;

the payment is taken, for the purposes of those sections, to have the same character and nature as the operations, facilities or other things procured; and

(d) if subsection (1A) applies to the other person in relation to the payment - to the extent that:

(i) the payment is to procure the carrying on or providing of the operations, facilities or other things; and

(ii) the payment does not relate to use of property on which the other person has incurred capital expenditure;

the payment is taken, for the purposes of those sections, to be of the same amount, and to have the same character and nature, as the expenditure the other person incurred in carrying on or providing the operations, facilities or other things procured.

Note: If the payment is excluded expenditure, it will not be exploration expenditure under section 37, general project expenditure under section 38 or closing-down expenditure under section 39. However, if paragraph (1)(d) applies to the payment, the amount taken to be excluded expenditure may be reduced under subsection (1D) of this section.

(1A) This subsection applies to the other person in relation to a payment if, at the time the payment is made, the other person:

(a) holds an interest in the petroleum project to which the operations, facilities or other things relate; or

(b) is connected (within the meaning of section 328-125 of the Income Tax Assessment Act 1997) with the eligible person.

(1B) The amount of the other person’s expenditure referred to in paragraph (1)(d) is taken not to exceed so much of the amount of the eligible person’s payment as:

(a) is a payment to procure the carrying on or providing of the operations, facilities or other things; and

(b) does not relate to use of property on which the other person has incurred capital expenditure.

(1C) If:

(a) subsection (1A) applies to the other person in relation to the payment; and

(b) the other person, to any extent, procures for:

(i) the eligible person; or

(ii) the eligible person and one or more persons who hold an interest in the project;

the operations, facilities or other things from a third person who is connected (within the meaning of section 328-125 of the Income Tax Assessment Act 1997) with the other person;

the references in paragraph (1)(d) and subsection (1B) to the other person’s expenditure are taken (to the extent that carrying on or providing the operations, facilities or other things was procured from the third person) to be references to the third person’s expenditure.

(1D) If the other person’s expenditure is reduced because of subsection (1B), sections 37, 38, 39 and 44 apply in relation to that expenditure as if it were reduced to the same extent.