PETROLEUM RESOURCE RENT TAX ASSESSMENT REGULATIONS 2005 (REPEALED)

PART 5 - THE RESIDUAL PRICING METHOD  

Division 5.2 - Identifying and classifying included costs  

REGULATION 31   CAPITAL AND OPERATING COSTS  

31(1)    
For Step 5 of the residual pricing method, an included cost for a participant in an integrated operation is a capital cost if:

(a) it is not a personal cost; and

(b) either:

(i) it was incurred before the production date; or

(ii) the unit of property for which it was incurred is a depreciating asset for section 40-30 of the Income Tax Assessment Act 1997 ; or

(iii) it is a project amount within the meaning of section 40-840 of the Income Tax Assessment Act 1997 .

Example of application of subparagraph (1)(b)(i)

If a person incurs operating expenses before the production date, they are treated as capital costs for the purposes of these Regulations.

31(2)    
For Step 5 of the residual pricing method, an included cost for a participant in an integrated operation is an operating cost if:

(a) it is not a personal cost; and

(b) it is not a capital cost.

31(3)    
A cost which is a capital cost only because of subparagraph (1)(b)(i) is taken to have been incurred on the 1 January in the financial year in which it was incurred.

Note:

Costs that relate to a unit of property that is constructed over several years of tax are dealt with in regulation 33 .