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  • Petroleum resource rent tax

    The petroleum resource rent tax (PRRT) is a profits-based tax that only taxes profits above a specified rate of return.

    PRRT revenues are also affected by key design features of the PRRT. PRRT will only arise when a project has recovered all eligible outlays associated with the project (after deducting eligible exploration expenditure transferred from other projects), including the achievement of a threshold rate of return on the outlays. This means projects tend to pay no PRRT for some years even after production has commenced.

    Unlike income tax, where many capital costs are deductible over a defined life, all deductible expenditure for PRRT purposes is immediately deductible, whether capital or revenue.

    Total petroleum resource rent tax payable

    There are nine corporate entities in the 2017–18 PRRT transparency population, with total PRRT payable of $1.16 billion. The number of entities paying PRRT decreased from 14 in the previous year and PRRT payable increased from $946 million.

    The increase in PRRT payable reflects the increased profitability of PRRT liable companies in 2017–18, of which oil prices (up 21%) were a key driver (World Bank Commodity Price Data – The Pink Sheet)External Link.

    The Australian dollar was 2.6% higher on average over 2017–18, which would generally have a negative impact on the profitability of PRRT liable companies (RBA Commodity Prices Table I2)External Link.

      Last modified: 12 Dec 2019QC 60880