Petroleum Resource Rent Tax Assessment Act 1987

SCHEDULE 1 - PROVISIONS RELATING TO INCURRING AND TRANSFER OF EXPLORATION EXPENDITURE ON OR AFTER 1 JULY 1990  

Sections 2 , 35A , 35B , 45A , 45B and 45D

PART 3 - CLASS 2 GDP FACTOR EXPENDITURE AND TRANSFERABLE EXPLORATION EXPENDITURE  

12   WHAT HAPPENS IF THERE IS A NOTIONAL TAXABLE PROFIT  

12(1)    
This clause applies if there is a notional taxable profit in relation to the person, the petroleum project and the assessable year.

12(2)    
For the purposes of this clause, the available exploration expenditure amount for a GDP expenditure year is worked out as follows:

(a) work out, in relation to the GDP expenditure year and each later financial year ending before the assessable year, an amount in accordance with the formula:

Exploration expenditure amount × GDP factor

where:

Exploration expenditure amount
means:

(i) in making the calculation in relation to the GDP expenditure year - the incurred exploration expenditure amount in relation to the GDP expenditure year; or

(ii) in making the calculation in relation to one of the later financial years - the amount calculated under this paragraph in relation to the immediately preceding financial year for the purpose of working out the available exploration expenditure amount for the GDP expenditure year;

GDP factor
means the GDP factor in relation to the financial year in relation to which the calculation is being made;

(b) the available exploration expenditure amount for the GDP expenditure year is the amount worked out under paragraph (a) in relation to the most recent of the later financial years referred to in that paragraph.

12(3)    
If the total of the available exploration expenditure amounts for the GDP expenditure years is less than or equal to the notional taxable profit:

(a) the person is taken to have incurred an amount of class 2 GDP factor expenditure in the assessable year in relation to the project equal to the total of those available exploration expenditure amounts; and

(b) that class 2 GDP factor expenditure is attributable to all the expenditure included in the incurred exploration expenditure amounts for the GDP expenditure years; and

(c) none of the expenditure included in the incurred exploration expenditure amounts for the GDP expenditure years is transferable by the person in relation to the assessable year.

12(4)    
If the total of the available exploration expenditure amounts for the GDP expenditure years exceeds the notional taxable profit:

(a) the person is taken to have incurred an amount of class 2 GDP factor expenditure in the assessable year in relation to the project equal to the notional taxable profit; and

(b) the expenditure to which that class 2 GDP factor expenditure is attributable is to be worked out in accordance with whichever of subclauses (5) and (6) is applicable; and

(c) the expenditure included in the incurred exploration expenditure amounts for the GDP expenditure years that is not expenditure to which that class 2 GDP factor expenditure is attributable is transferable by the person in relation to the assessable year.

12(5)    
If:

(a) class 2 GDP factor expenditure is taken to be incurred by subclause (4); and

(b) the available exploration expenditure amount for the earliest of the GDP expenditure years for which there is such an amount equals or exceeds the notional taxable profit;
the class 2 GDP factor expenditure is attributable to so much of the expenditure included in the incurred exploration expenditure amount for that GDP expenditure year as, if it had been the only expenditure included in that amount, would have made the available exploration expenditure amount for that GDP expenditure year equal the notional taxable profit.

12(6)    
If:

(a) class 2 GDP factor expenditure is taken to be incurred by subclause (4); and

(b) the notional taxable profit exceeds the available exploration expenditure amount for the earliest of the GDP expenditure years for which there is such an amount;
the following provisions have effect:

(c) add amounts in accordance with the following rules:

(i) start with the available exploration expenditure amount for the earliest of the GDP expenditure years for which there is such an amount and add to that, in order starting with the next earliest GDP expenditure year, the available exploration expenditure amounts for the later GDP expenditure years;

(ii) if adding the available exploration expenditure amount for a GDP expenditure year would make the total exceed the notional taxable profit, add only so much of that amount as makes the total equal the notional taxable profit and do not add the available exploration expenditure amount for any later GDP expenditure year;

(d) the class 2 GDP factor expenditure is attributable to:

(i) all the expenditure included in the incurred exploration expenditure amounts for each GDP expenditure year for which the whole available exploration expenditure amount was added in accordance with subparagraphs (c)(i) and (ii); and

(ii) if, under those subparagraphs, part only of the available exploration expenditure amount for a GDP expenditure year was added - so much of the expenditure included in the incurred exploration expenditure amount for that GDP expenditure year as, if it had been the only expenditure included in that amount, would have made the available exploration expenditure amount for that GDP expenditure year equal the added part.