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End of attention

Relative difficulty of the valuation

The risk of an inaccurate valuation, with material or significant consequences for a taxpayer's PRRT liability, may be expected to increase with the complexity of the operations.

In considering the relative difficulty of valuing the petroleum project, the ATO will adopt the approach taken in 'Market valuation for tax purposes' but adapted to the PRRT context. In that context, the ATO will take into account the:

  • size and scale of the taxpayer's operations
  • nature of the assets, for example the resource type, such as the type of petroleum product
  • possible complexity of the valuation:
    • simpler - for example, an entity with only one title extracting one resource with relatively few physical assets, where comparable asset values are readily obtainable and a non-expert can easily obtain these, or recent valuations are available and are still accurate
    • more complex - for example, different resources, many titles, several petroleum rights, integrated infrastructure, and purpose-built processing plant.
    Last modified: 11 Nov 2011QC 25075