In the 2023-24 Budget, the Australian Government announced measures to update the Petroleum Resource Rent Tax (PRRT) Gas Transfer Pricing arrangements, including a commitment to update the PRRT general anti-avoidance rules.
Additional measures were also announced to clarify the tax treatment of:
- ‘exploration’ in the Petroleum Resource Rent Tax Assessment Act 1987 (PRRT Act)
- ‘mining, quarrying and prospecting rights’ (MQPRs) in the Income Tax Assessment Act 1997.
The exposure draft anti-avoidance provisions amend the PRRT anti-avoidance rules to be in line with the income tax anti-avoidance rules.
This ensures anti-avoidance provisions operate across the PRRT and income tax in a consistent fashion.
Clarifying the tax treatment of ‘exploration’ and ‘mining, quarrying and prospecting rights’
The exposure draft amendments to the PRRT Act will modernise the PRRT anti-avoidance rules to bring them into line with the anti-avoidance rules that apply to corporate income tax and ensure that the definition of ‘exploration’, which receives favourable treatment under the PRRT, is not interpreted too broadly.
The exposure draft amendments to the Income Tax Assessment Act 1997 clarify the tax treatment of ‘exploration’ and MQPRs to ensure the income tax legislation operates as intended following the Full Federal Court’s decision in Commissioner of Taxation v Shell Energy Holdings Australia Limited.
Treasury is seeking views from interested parties on both exposure drafts and the associated explanatory material.
Consultation on the remaining components of the regulation remake and the Callaghan review recommendations will commence in early 2024.
We also seek stakeholder feedback on priority issues that would inform the ATO’s administrative approach and public advice and guidance on these measures.
This includes feedback on the form of any public advice and guidance necessary to support understanding of these measures.