Record keeping for PRRT
You are required to keep records of all transactions – and other acts – that are relevant for determining their petroleum resource rent tax (PRRT) liability for each project interest they hold.
If you hold interests in exploration permits and retention leases, you should also keep records to meet future PRRT obligations.
Types of records to be kept
If you hold an interest in a petroleum project, exploration permit or retention lease you should ensure that they keep records that are in writing in English, or readily accessible and convertible into writing in English, so as to enable their liability under the PRRT legislation to be ascertained.
Examples of the types of records that may assist in explaining transactions include:
- lifting schedules
- billing statements
- financial statements.
Record retention periods
Records must be retained for a period of seven years from the date of assessment for the year of tax in which the relevant amount is returned as an assessable receipt or claimed as deductible expenditure.
It is often the case for PRRT that there are many years between expenditure being incurred and that expenditure being claimed. Records of such expenditure need to be retained for PRRT purposes for periods that are generally much longer than the retention periods applicable to other record keeping requirements.
Joint venture record keeping requirements
If you hold an interest in a petroleum project, exploration permit or retention lease under a joint venture arrangement, you are required to maintain records about your individual interest.
Both operators and non-operators in a joint venture arrangement are required to meet the same PRRT record keeping obligations as other taxpayers.
Book value approach
The book value approach takes into consideration the book values of starting base assets that were included in the most recent audited financial report that was prepared in the 18 months preceding 2 May 2010 and that relates to a financial period that ended in the 18 months preceding 2 May 2010.
The book value approach also takes into account interim expenditure incurred from the date of the relevant financial report to 30 June 2012.
As such, if you choose to use the book value approach in determining their starting base amount should keep records in relation to the financial reports they relied on in determining the value of their starting base assets. Additionally, they should keep records for the interim expenditure.
Who is required to keep records in a consolidated group
If a group consolidates for PRRT purposes, all the onshore petroleum project interests held by subsidiary members are treated as being transferred to the head company of the group or provisional head company of a MEC group. The head company is then responsible for PRRT obligations for that single project interest including record keeping requirements.
However, when a member of a consolidated group leaves the group, they must retain records that can substantiate the amount and the nature of their share of assessable receipts and deductible expenditure.
Maintaining detailed records of all relevant transactions and other acts will ensure that taxpayers can claim all deductions to which they are entitled and do not pay more PRRT than they need to.