The Morrison Government is reforming the PRRT to strengthen the integrity of the tax and to ensure a fairer return for Australians for the extraction of our oil and gas resources.
From 1 July 2019 Treasury Laws Amendment (2019 Petroleum Resource Rent Tax Reforms No. 1) Bill 2019, which has just been introduced in Parliament, will:
- Lower the uplift rates that apply to certain categories of carried-forward expenditure. This limits the excessive compounding of deductions and updates the PRRT design settings to better reflect the current structure of Australia’s petroleum industry which is dominated by liquefied natural gas projects. Existing investments are respected.
- Remove onshore projects from the PRRT regime. No PRRT revenue has been collected from onshore projects since they were brought into the PRRT in 2012, and that is expected to remain unchanged into the future. In practice, onshore projects that would never pay PRRT have been able to transfer their exploration deductions to profitable offshore project interests, reducing PRRT collected. The Government’s changes protect PRRT revenue, reduce regulatory burdens and simplify the tax. Onshore petroleum projects will remain subject to State taxes.
The Bill implements a key component of the package of measures announced by the Government on 2 November 2018 in response to the independent PRRT Review completed by Michael Callaghan AM PSM in April 2017.
The changes are expected to raise $6.0 billion over the next decade, to 2028-29.