Apportionment of PRRT payments for procured services

This information gives an overview of section 41 of the Petroleum Resource Rent Tax Assessment Act 1987 (PRRTAA), and provides guidance on:

  • when it may be necessary to apportion a payment made to another entity to procure the carrying on or providing of operations, facilities or other things of a kind referred to in sections 37, 38 or 39 of the PRRTAA (project activities)
  • practices that may assist in the apportionment of that payment.

This information is not interpretive and does not provide advice or guidance on how to work out the nature and character of a particular payment to establish its deductibility.

The issue of deductibility of exploration expenditure under section 37 of the PRRTAA is discussed in Draft Taxation Ruling TR 2013/D4External Link Petroleum resource rent tax: what does 'involved in or in connection with exploration for petroleum' mean? For more information on the requirements of deductibility in sections 37, 38 and 39 of the PRRTAA see PRRT deductible expenditure.

This information does not prescribe any specific methods that an entity has to use in apportioning a payment. The appropriateness of an apportionment method is a question of fact to be worked out on a case-by-case basis.

In this information, the entity that makes a payment to another entity to procure project activities is referred to as the 'procuring entity', and the other entity is referred to as the 'service provider'.

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    Last modified: 26 Feb 2014QC 38248