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Review finds petroleum resources rent tax sufficient

Review finds petroleum resources rent tax sufficient

Photo by Bloomberg

28th April 2017

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

     

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PERTH (miningweekly.com) – The Australian oil and gas industry has welcomed an independent review into the operation of the petroleum resources rent tax (PRRT), which concluded that the Australian community is not being short changed by the current royalty and tax system.

Federal Treasurer Scott Morrison in November last year announced the review into the PRRT, crude oil excise and associated commonwealth royalties to advise the government on the extent to which the tax is operating.

Morrison on Friday said that the review had received 77 submissions in response to its December 2016 issues note, with the review team also meeting with a broad range of interested parties, including 19 from industry.

“The report highlights improvements that can be made to the PRRT over the longer term. It does not recommend changes to the crude oil excise or commonwealth royalty schemes,” Morrison said.

“The report finds the decline in PRRT revenue does not, in itself, indicate the Australian community is being shortchanged in receiving an equitable return from the development of its resources. It also finds that the current scheme is not deterring investment.”

While the report recommends scheme changes that impact beyond the current investment decision horizon; such as uplift rates, transferability and order of claiming deductions, as well as minor changes that would apply to existing and new projects to improve the operation of the PRRT, Morrison said that recommendations would not have any immediate material impact on the forthcoming Budget.

“The report emphasises that care must be taken in making any changes that could impact important projects that have made advanced plans based on existing arrangements.

“Accordingly, the government will consider the report outside the current Budget, to enable comments to be received on the recommendations and provide a considered response in the next few months.”

The Australian Petroleum Production & Exploration Association (Appea) said on Friday that a competitive taxation regime was essential if Australia was to continue to attract investment, and that further investment in existing and future oil and gas projects was needed to underpin secure and reliable energy supplies.

“Australia’s oil and gas exploration is at a 30-year low. Industry and governments must work together to identify and remove impediments to exploration,” said Appea CEO Malcolm Roberts.

“We need to avoid prolonged periods of uncertainty, as the international competition for capital is intense. The release of this report is an important step in the review process.

“The PRRT has been very successful in enabling the development of Australia’s oil and gas resources over the last three decades. It is a balanced system that reduces the significant risks facing investors while also delivering economic and taxation benefits to the community.

“The industry will carefully review the report’s recommendations before providing comments to Treasury on how these measures would affect oil and gas operations.”

Edited by Mariaan Webb
Creamer Media Senior Deputy Editor Online

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