Petroleum Resource Rent Tax overhaul outlined

Changes to the Petroleum Resource Rent Tax will mean the offshore LNG industry pays more tax sooner and promises a fairer return to the Australian community, according to the Federal Government. Treasurer Jim Chalmers said the changes responded to the Treasury Gas Transfer Pricing (GTP) Review, as well as recommendations in the earlier Callaghan Review. "The government will act on Treasury’s key recommendation to achieve a fairer return from offshore LNG projects by introducing a cap on the use of deductions from July 1, 2023. Specifically, the change will limit the proportion of PRRT assessable income that can be offset by deductions to 90 per cent," he said. "This change will bring forward PRRT revenue from LNG projects. This will ensure a greater return to taxpayers from the offshore LNG industry, while limiting impacts on investment incentives and risks to future supply." He said the government would proceed with eight of 11 recommendations by the GTP Review as well as eight recommendations by the Callaghan Review that were accepted but not implemented by the previous government. "This package, which includes integrity reforms, is expected to increase tax receipts by $2.4 billion over the forward estimates," he said. "The government will consult on final design and implementation details for the deductions cap and on the draft GTP rules later this year. Consultation on other policy changes (recommendations from the Callaghan Review and anti-avoidance rules) will occur in early 2024." APPEA chief executive Samantha McCulloch said the PRRT changes aimed to get the balance right between the need for a strong gas sector to support reliable electricity and domestic manufacturing and the need for a more sustainable national budget. Their announcement would provide greater certainty for the industry to consider future investment, she said. “PRRT revenues are already at their highest level ever, forecast to deliver revenue of more than $11 billion over the forward estimates," she said. "The PRRT changes are forecast to deliver an additional $2.4 billion over the forward estimates at current forecast commodity prices.” She said a bipartisan approach would be needed to provide certainty for future investment and APPEA called on the government to work constructively and cooperatively with the opposition. “Australia has also been a reliable energy-producing nation for energy-consuming countries in Asia region for more than half a century,” Ms McCulloch said. “We cannot and must not walk away from this role, which is the foundation of our strategic ties throughout the Asia Pacific. It has also been the foundation of decades of prosperity for Australians. “Gas is going to be a critical part of the global energy mix for decades. If Australia does not invest in new gas supplies, the slack will be taken up by others, costing Australian jobs and prosperity. The US has recognised the danger of this and is growing both its gas industry and its carbon capture and storage (CCS) industry.”

Petroleum Resource Rent Tax overhaul outlined

Industry Queensland

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