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  • Measuring the gap

    We have adopted a model-based bottom-up methodology, employing channel analysis and micro-analytical techniques in order to estimate the petroleum resource rent tax (PRRT) gap. This method largely relies on assumptions based on our operational intelligence and subject matter expertise.

    We have a high level of coverage of the PRRT client base covered by this legislation. We have entered into annual compliance arrangements (ACAs) and advance pricing arrangements (APAs) with some PRRT taxpayers.

    We have observed a high level of willing participation, with taxpayers correctly registering, lodging and paying on time.

    The main driver of the PRRT gap is complexity in the tax law which can result in different interpretations. This is particularly the case in relation to complicated areas of the law concerning the calculation of assessable receipts, and the deductibility and classification of expenditure. A further complexity arises due to a number of key concepts of the PRRT differing from equivalent income tax concepts.

    An independent expert panel provides advice on the suitability of our gap estimates and methodologies. Further information regarding the panel, including its members, can be found in Australian tax gaps – overview.

    The reliability of this estimate is assessed as high.

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      Last modified: 17 Oct 2019QC 57597