Petroleum Resource Rent Tax Assessment Regulations 2024

PART 3 - THE SUBSTITUTE PRICES  

SECTION 31   NETBACK PRICE  

31(1)    
The netback price of an assessable gas for a taxpayer who is a participant in a relevant operation in a year of tax is:

EPVal − ((DCC × QC) + DOC)	−	DPC
Quantity of assessable gas		QTDG

where:

DCC
(short for downstream capital costs) means the total amount of downstream capital costs incurred by the participants and allocated to the year of tax (see section 34 ).

DOC
(short for downstream operating costs) means the total amount of downstream operating costs incurred by the participants in the year of tax (see section 34 ).

DPC
(short for downstream personal costs) means the total amount of downstream personal costs of the taxpayer for the year of tax.

EPVal
(short for end product value) means:

(a) if an election under section 55 has been made for the operation - the amount worked out under subsection (2) of this section; or

(b) otherwise - the total market value in the year of tax of:

(i) for a relevant GTL operation - the project liquid produced; or

(ii) for a relevant GTE operation - the project electricity produced.

QC
(short for quantity coefficient) means:

(a) for a relevant operation that measures by volume - the volume coefficient for the year of tax; or

(b) for a relevant operation that measures by mass - the mass coefficient for the year of tax.

QTDG
(short for quantity of taxpayer ' s downstream gas) means the quantity, measured by volume or mass, of the assessable gas that was produced in the operation in the year of tax and:

(a) for a relevant GTL operation - processed into project liquid that the taxpayer was entitled to receive (including any of that gas that was used in that processing); or

(b) for a relevant GTE operation - consumed in the production of project electricity that the taxpayer was entitled to receive.

quantity of assessable gas
means the quantity, measured by volume or mass, of the assessable gas that was produced in the operation in the year of tax.

31(2)    
For the purposes of paragraph (a) of the definition of EPVal in subsection (1) , work out the following for the taxpayer for the year of tax:

Market value of taxpayer product	×	Quantity of total product
Quantity of taxpayer product

where:

market value of taxpayer product
means the market value of the quantity of taxpayer product.

quantity of taxpayer product
means:

(a)    for a relevant GTL operation - the quantity, measured by volume or mass, of project liquid; or

(b)    for a relevant GTE operation - the quantity of project electricity;

that the taxpayer was entitled to receive in the year of tax.

quantity of total product
means:

(a)    for a relevant GTL operation - the total quantity, measured by volume or mass, of project liquid; or

(b)    for a relevant GTE operation - the total quantity of project electricity;

produced in the operation in the year of tax.

31(3)    
If the taxpayer sells a quantity of project liquid or project electricity from the operation as part of the operation in the year of tax, and the sale is an arm ' s length transaction, the market value of the quantity is taken to be the amount received for the sale.

31(4)    
For a quantity of project liquid or project electricity to which subsection (3) does not apply, the market value of the quantity is the market value at the end of the downstream stage.

31(5)    
If the Commissioner is not satisfied that sufficient information is available to determine a market value for the purposes of subsection (4) , the market value of the quantity of project liquid or project electricity is the amount determined by the Commissioner as fair and reasonable.

31(6)    
If the value of QTDG is zero, the value of DPC divided by QTDG is taken to be zero.