BILLS DIGEST NO. 85, 2011–12, 22 December 2011

Petroleum Resource Rent Tax (Imposition—General) Bill 2011

Petroleum Resource Rent Tax (Imposition—Customs) Bill 2011

Petroleum Resource Rent Tax (Imposition—Excise) Bill 2011

Richard Webb
Economics Section

Date introduced:  2 November 2011

House:  House of Representatives

Portfolio: Treasury

Commencement:  All three Bills commence on 1 July 2012.

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bills’ home pages for the Petroleum Resource Rent Tax (Imposition—General) Bill 2011, Petroleum Resource Rent Tax (Imposition—Customs) Bill 2011 and Petroleum Resource Rent Tax (Imposition—Excise) Bill 2011, or through http://aph.gov.au/Parliamentary_Business/Bills_Legislation.When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the ComLaw website at http://www.comlaw.gov.au/.

Purpose

The purpose of the Petroleum Resource Rent Tax (Imposition—General) Bill 2011 (general Bill) is to impose tax on the profits of petroleum projects in so far as the tax is neither a customs duty nor an excise duty. The Petroleum Resource Rent Tax (Imposition—Customs) Bill 2011 (customs Bill) imposes tax on the profits of petroleum projects in so far as the tax is a customs duty, and the Petroleum Resource Rent Tax (Imposition—Excise) Bill 2011 (excise Bill) imposes tax on the profits of petroleum projects in so far as the tax is an excise.

Background

The Petroleum Resource Rent Tax (PRRT) applies to all petroleum projects in offshore areas other than the North West Shelf. The latter are subject to excise and the Commonwealth royalty system. The PRRT is levied on the taxable profits of a petroleum project at a rate of 40 per cent. The taxable profit of a project is the excess of assessable receipts over the sum of certain deductible expenditures. The Petroleum Resource Rent Tax Assessment Act 1987 (PRRTAA 1987) implements the PRRT. The associated Petroleum Resource Rent Tax Assessment Amendment Bill 2011 seeks to extend the PRRT to the North West Shelf and onshore projects. For information on this proposal, see the Bills Digest for the Petroleum Resource Rent Tax Assessment Amendment Bill 2011.[1]

Committee consideration

All four Bills have been referred to the Senate Standing Committee on Economics for inquiry and report by 14 March 2012.[2]

Key provisions

The wording of all three Bills is identical except in so far as the general Bill imposes a tax that is neither a customs duty nor an excise, while the customs Bill and the excise Bill respectively impose customs duty and excise duty.  Given these exceptions, the proposed provisions of the General Bill follow. The Explanatory Memorandum explains the reasons the three separate imposition Bills will be enacted to replace the original imposition Act, namely, the Petroleum Resource Rent Tax Act 1987.[3]

Petroleum Resource Rent Tax (Imposition-General) Bill 2011

Item 4 imposes tax on the taxable profits of petroleum projects but only in so far as the tax is neither a customs duty nor an excise within the meaning of section 55 of the Constitution. The tax starts from 1 July 1986.

Item 5 imposes the tax at the rate of 40 per cent.

Item 6 states that the Act does not impose a tax on property of a state as understood under section 114 of the Constitution. The tax is imposed on taxable profits from petroleum projects.

Concluding comments

While the Bills are seemingly retrospective, they are consistent with the commencement of the original imposition Act in imposing tax from 1 July 1986. This was the starting date for the imposition of the PRRT, and the rate of tax has remained unchanged at 40 per cent.

Members, Senators and Parliamentary staff can obtain further information from the Parliamentary Library on (02) 6277 2500.

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ISSN 1328-8091

[1].               R Webb, Petroleum Resource Rent Tax Assessment Amendment Bill 2011, Bills Digest, no. 86, 2011–12, Parliamentary Library, Canberra, 2011, viewed 22 December 2011, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22legislation%2Fbillsdgs%2F1311535%22

[2].               Senate Economics Committee, Inquiry into the Minerals Resource Rent Tax Bill 2011 [and related Bills], viewed 28 November 2011, http://www.aph.gov.au/Parliamentary_Business/Committees/Senate_Committees?url=economics_ctte/mrrt_bill_2011/info.htm

[3].               Explanatory Memorandum, Petroleum Resource Rent Tax Assessment Amendment Bill 2011, pp. 7-8.