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  • How to work out PRRT

    PRRT liability is calculated on the taxable profit the entity makes from an interest in a petroleum project in a year of tax.

    Taxable profit is calculated by subtracting certain deductible expenditure and transferred exploration expenditure from the assessable receipts derived from the project interest.

    An entity's PRRT liability is levied at 40% of the taxable profit made from its interest in the project.

    If an entity holds an interest in an exploration permit or retention lease, it will not have a liability to pay PRRT until a production licence is derived from that interest and commercial production starts.

    Framework for calculating PRRT liability

    The following diagram illustrates the basic framework for calculating a PRRT liability:

    PGI_RRT_27322

    If assessable receipts exceed deductible expenditure and transferred exploration expenditure there is a taxable profit. This amount is taxed 40%.

    If deductible expenditure exceeds assessable receipts, there is no taxable profit and no PRRT liability. Any unused deductible expenditure is uplifted and carried forward and will be deducted against future assessable receipts derived in later years.

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    Calculating PRRT liability for consolidated groups

    If a group of entities is consolidated for PRRT purposes, all the interests held by the group in an onshore petroleum project are treated as one project interest held by the head company of the group. As a result, the head company will be responsible for calculating the group's PRRT liability for that project interest.

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    Payment of PRRT liabilities

    Entities with an interest in a production licence that is in commercial production are required to lodge an annual PRRT return containing their PRRT liability.

    An entity is required to pay its PRRT liability in three cumulative quarterly instalments with a final payment when it lodges its annual PRRT return.

    The quarterly PRRT instalment is calculated using the taxable profit attributed to the instalment period.

    Where the PRRT instalments paid exceed the assessed PRRT liability for the year, there will be a PRRT refundable amount.

    Entities with an interest in an exploration permit, retention lease or a production licence that has not started commercial production are not required to lodge an annual PRRT return or pay quarterly PRRT instalments.

    See also:

      Last modified: 24 Nov 2016QC 27322