Petroleum Resource Rent Tax Assessment Regulations 2024

PART 4 - THE RESIDUAL PRICING METHOD  

Division 2 - Identifying and classifying included costs  

SECTION 40   CAPITAL COSTS AND OPERATING COSTS  

40(1)    
For the purposes of step 5 of the residual pricing method, an included cost for a participant in a relevant operation is a capital cost if:

(a)    it is not a personal cost; and

(b)    it is not a commercial tolling fee; and

(c)    any of the following subparagraphs apply:

(i) it was incurred before the production date;

(ii) the unit of property for which it was incurred is a depreciating asset for the purposes of section 40-30 of the Income Tax Assessment Act 1997 ;

(iii) it is a project amount within the meaning of section 40-840 of the Income Tax Assessment Act 1997 .

Note:

Subparagraph (c)(i) applies if, for example, a person incurs operating expenses before the production date. Those expenses will be capital costs for the purposes of this instrument.

40(2)    
A cost that is a capital cost only because of subparagraph (1)(c)(i) is taken to have been incurred on 1 January in the financial year in which it was incurred.

Note:

Costs that relate to a unit of property that is constructed over several years of tax are dealt with in section 43 .

40(3)    
For the purposes of step 5 of the residual pricing method, an included cost for a participant in a relevant operation is an operating cost if:

(a)    it is not a personal cost; and

(b)    it is not a capital cost.