Who can lodge a starting base return
An entity that wishes to receive the benefit of a starting base amount, or choose the look-back approach, needs to lodge a PRRT starting base return. It can lodge a starting base return for each petroleum interest it holds on 30 June 2013 that also existed on 1 May 2010. A separate starting base return needs to be lodged for each petroleum interest.
An entity can lodge a starting base return for a petroleum interest that existed on 1 May 2010 that it held on 30 June 2013 if the petroleum interest relates to an exploration permit, retention lease, or production licence in an onshore petroleum project or the North West Shelf project.
An explorer that has no other PRRT obligations can still lodge a starting base return if it holds an onshore petroleum interest.
An entity that holds an interest in an onshore exploration permit or retention lease that could become a petroleum project in the future should consider lodging a starting base return for each of those interests. Once an entity has lodged a valid starting base return and the petroleum interest has a starting base (or if the look-back approach is chosen, eligible real expenditure) that starting base (or the ability to deduct eligible real expenditure) is transferable with the petroleum interest to other entities.
An entity needs to lodge a starting base return in order to have a starting base amount or the ability to deduct eligible real expenditure as allowed under the look-back approach.
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Example: Lodging starting base returns
Mandrel Ltd acquires an onshore exploration permit on 18 November 1994. A production licence is derived in relation to the exploration permit on 26 July 2013, creating the Spline project. Mandrel Ltd also has a combined petroleum project (the Fracture project) and it obtains a combination certificate from the Resources Minister allowing the Spline project to combine with the Fracture project from 25 September 2013 onwards.
Mandrel can lodge starting base returns for the interests it had on 30 June 2013. It can lodge a starting base return for the:
- exploration permit that existed on 30 June 2012 from which the Spline project was derived
- Fracture project in the form that it existed on 30 June 2012 (excluding the Spline project).
Mandrel cannot lodge a starting base return for the Spline project, because it did not exist on 30 June 2012 – instead, it lodges a starting base return for the exploration permit from which the Spline project was derived.
Once the project combines, the combined project’s starting base amount includes the sum of starting base amounts for the exploration permit (from which the Spline project derived) and the Fracture project.
Example: Starting base returns when two petroleum interests combine
Continuing the example above, Mandrel Ltd lodged two starting base returns at the end of the 2012–13 year of tax – one for the exploration permit (which later became the Spline project); and one for the Fracture project. Mandrel chose the market value approach for both petroleum interests. At the end of the 2012–13 year of tax, it has the following:
- $2 million of uplifted, undeducted starting base expenditure for the exploration permit (which cannot be claimed as starting base expenditure until a production licence has been granted and the project begins deriving assessable petroleum receipts)
- $8 million of starting base expenditure for the Fracture project. It used $3 million against assessable receipts, leaving $5 million of undeducted starting-base expenditure (to be uplifted on 1 July 2013) for use in later years.
In the 2013–14 year of tax, the Spline project combines with the existing Fracture project, and Mandrel pools the starting base expenditure of both projects and can deduct a maximum of $7 million of starting base expenditure (plus the uplift on the $5 million applied on 1 July 2013).
Example: Lodging a starting base return for interests which came into existence after 2 May 2010
Drillbit Ltd applies for an exploration permit, which is granted on 13 August 2010. Although it cannot lodge a starting base return for its interest in the exploration permit, it can claim eligible real expenditure incurred which relates to the petroleum interest from 13 August 2010 to 30 June 2012.
Example: Lodging a starting base return for an interest which existed before, and was acquired after, 2 May 2010
Mattock Ltd has a petroleum interest which came into existence on 22 September 2008. Bore Ltd acquires the petroleum interest on 10 December 2010 and continues to hold the interest until after 30 June 2013. Bore can lodge a starting base return for the petroleum interest and can choose between the:
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- book value approach
- market value approach
- look-back approach.