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  • PRRT deductible expenditure

    An entity's deductible expenditure (or eligible real expenditure) for a petroleum project includes expenditure that has a close or quite direct connection to a petroleum project. It may be of a capital or revenue nature and is deductible in the year the payment is liable to be made.

    If deductible expenditure exceeds the assessable receipts derived during the year, the excess is uplifted and carried forward so it can be deducted against assessable receipts derived in future years.

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    Eligible real expenditure

    From 1 July 2019, there are five broad categories of eligible real expenditure:

    • exploration expenditure
    • general project expenditure
    • resource tax expenditure
    • starting base expenditure, and
    • closing-down expenditure.

    Carried forward undeducted expenditure

    Eligible real expenditure (other than closing-down expenditure) that an entity has not deducted against assessable receipts derived in the year the expenditure was incurred can be uplifted and carried forward so it can be deducted against assessable receipts derived in later years.

    The uplift rate for expenditure that remains undeducted at the end of a year is worked out according to its class and the time when it was actually incurred.

    Depending on the class of expenditure, undeducted expenditure can be uplifted using the gross domestic product (GDP) factor rate for the relevant year or the long-term bond rate (LTBR) for the relevant year.

    From 1 July 2019, new uplift rates apply to certain categories of carried-forward undeducted expenditure.

    Some exploration expenditure may also be transferable between petroleum projects.

      Last modified: 22 Oct 2019QC 26133