For taxpayers with interests in petroleum projects particularly there have been a number of significant developments which require consideration:
- recent judicial consideration of the meaning of ‘exploration’ in a petroleum resource rent tax (PRRT) context will necessitate analysis of historical positions adopted in characterising expenditure as exploration.
This will be equally relevant for taxpayers who have inherited exploration expenditure on acquiring an interest in a petroleum project.
- legislative amendments following the Esso decision largely reinstate the historical industry and ATO view in relation to apportionment of expenditure for PRRT purposes, although the requirement to ‘look through’ certain related party transactions will need to be considered.
- amendments to the PRRT Regulations which make the legislated approach to determining a gas transfer price available to integrated onshore, gas to electricity and the North West Shelf project will also require consideration for effected taxpayers.
For non-operators and taxpayers that have inherited balances on acquiring a project interest a particular challenge will be accessing the information required to understand the impact of these developments.
Taken together, this equates to a number of matters requiring specific consideration for 30 June financial reporting purposes. Additionally, with some PRRT returns due for lodgement on 29 August 2013, these issues will require affected taxpayers to quickly come to terms with the impact of these changes.