Apportionment of PRRT deductible expenditure

The Petroleum Resource Rent Tax Assessment Act 1987 (PRRTAA) allows for a payment to be apportioned to the extent to which it is made in carrying on or providing the operations, facilities and other things in relation to a petroleum project (project activities). This information provides an overview of:

We have provided examples about how different apportionment methods may be used to work out an entity's deductible expenditure for PRRT purposes.

PRRT amendments following the Esso decision

In the decision of the Full Federal Court in Esso Australia Resources Pty Ltd v. Commissioner of Taxation [2012] FCAFC 5 (Esso decision), the court observed that the PRRT deductible expenditure provisions did not allow for the apportionment of payments if the liability to make a payment was not wholly confined to carrying on or providing the petroleum project activities.

Amendments were made to the PRRT to ensure that payments can be apportioned for the purposes of working out deductible expenditure.

    Last modified: 15 Nov 2013QC 37839