Peter Dutton (Dickson, Liberal Party, Minister for Revenue and Assistant Treasurer) Share this | Hansard source

I thank the members who have taken part in this debate on the Petroleum Resource Rent Tax Assessment Amendment Bill 2006 and the Petroleum Resource Rent Tax (Instalment Transfer Interest Charge Imposition) Bill 2006. The Petroleum Resource Rent Tax Assessment Amendment Bill 2006 implements a range of changes and improvements to Australia’s primary offshore petroleum taxation system, with effect from 1 July 2006.

Schedule 1 to this bill amends the Petroleum Resource Rent Tax Assessment Act 1987 to require taxpayers to transfer and deduct transferable exploration expenditure when calculating their petroleum resource rent tax quarterly instalment. Currently, this expenditure can only be transferred and deducted at the end of the financial year.

The Petroleum Resource Rent Tax (Instalment Transfer Interest Charge Imposition) Bill 2006 ensures constitutional validity of an instalment transfer interest charge. This charge is designed to recoup the time value of money associated with transfer of exploration expenditure in working out a quarterly instalment of tax that is subsequently reversed. It relates to the measure contained in schedule 1 of the Petroleum Resource Rent Tax Assessment Amendment Bill 2006.

Schedule 2 to the Petroleum Resource Rent Tax Assessment Amendment Bill 2006 makes amendments to allow internal corporate restructuring within company groups to occur without losing the ability to transfer exploration expenditure between the petroleum projects of group members. Currently, some company groups maintain inactive companies in order to protect their future ability to transfer unused exploration expenditure.

Schedule 3 to this bill allows the present value of expected future expenditures to close down an infrastructure facility associated with a particular petroleum project to be deductible against the petroleum resource rent tax receipts of this project. Schedule 4 to this bill applies the self-assessment regime to petroleum resource rent tax taxpayers as it generally applies to income tax. This will result in petroleum resource rent tax taxpayers fully self-assessing their liability and will also enable them to obtain binding rulings from the ATO.

Schedule 5 to the bill introduces several unrelated amendments to petroleum resource rent tax, including the following three primary amendments. First, payments of fringe benefits tax will be a deductible expense for petroleum resource rent tax purposes. This is consistent with the income tax treatment of these payments. Second, vendors disposing of an interest in a petroleum project will be required to provide a transfer notice to the purchaser of the project, setting out relevant information such as the amount of undeducted expenditure available. This is designed to encourage better provision of available information between vendors and purchasers transferring an interest in a petroleum project. Unlike income tax, the purchaser inherits the vendor’s petroleum resource rent tax position. Finally, the lodgement period for petroleum resource rent tax annual returns is extended from 42 days to 60 days, which will ease compliance costs for petroleum resource rent tax taxpayers.

The amendments in these bills reduce compliance costs, improve administration and remove inconsistencies in the Petroleum Resource Rent Tax Assessment Act 1987, improving the efficiency of the tax. Furthermore, the bills contain positive amendments which are consistent with the government’s overall approach to taxation reform, directed at simplifying Australia’s taxation system and making the system internationally competitive.

I should also bring to the attention of the House that the Australian Petroleum Production and Exploration Association, the peak industry body representing Australia’s upstream oil and gas industry, has publicly welcomed the proposed changes in these bills. The APPEA has said that the bills will clarify some uncertainties in the legislation and provide a clearer framework for industry to undertake their ongoing business activities. For the reasons I have outlined above, I commend these bills to the House.

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