{"id":"petroleum-royalty-act-2023","name":"Petroleum Royalty Act 2023","slug":"petroleum-royalty-act-2023","collection":"act","jurisdiction":"nt","status":"in_force","isInForce":true,"actNumber":null,"makingDate":null,"administeringDepartment":null,"currentVersion":{"id":30479,"registerId":"nt-petroleum-royalty-act-2023-current","compilationNumber":null,"startDate":"2026-04-01","status":"InForce","reasons":null,"registeredAt":null},"sections":[{"sectionNumber":"1","sectionType":"section","heading":"Petroleum Royalty Act 2023","content":"NORTHERN TERRITORY OF AUSTRALIA\nPETROLEUM ROYALTY ACT 2023\nAs in force at 2 July 2023\nTable of provisions\nPart 1 Preliminary matters\n1 Short title ......................................................................................... 1\n2 Commencement .............................................................................. 1\n3 Purpose ........................................................................................... 1\nPart 2 Interpretation\n4 Definitions ........................................................................................ 1\n5 Arm's length terms ........................................................................... 5\n6 Leases under Petroleum (Mining and Prospecting) Act 1954 .......... 5\nPart 3 Petroleum royalties\n7 Commencement of royalty ............................................................... 5\n8 Royalty on petroleum produced ....................................................... 6\n9 Royalty rate ..................................................................................... 6\n10 Royalty payments ............................................................................ 6\n11 Amount of quarterly payments ......................................................... 7\nPart 4 Calculation of gross value at the wellhead\n12 Meaning of Australian Dollar Equivalent and exchange rate ........... 7\n13 Meaning of gross value at the wellhead .......................................... 7\n14 Meaning of sales value .................................................................... 8\n15 Meaning of market value ................................................................. 9\n16 Shipping costs ............................................................................... 10\n17 Deductible costs ............................................................................ 10\n18 Allowable costs .............................................................................. 11\n19 Excluded costs .............................................................................. 12\n20 Treatment of deductions, costs and expenses, revenue and\nexpenditure .................................................................................... 14\n21 Swap arrangements ...................................................................... 14\nPart 5 Application of Taxation Administration\nAct 2007\n22 Application of Taxation Administration Act 2007............................ 15\n\nPetroleum Royalty Act 2023 ii\nPart 6 Miscellaneous matters\n23 Register of licensees and permittees............................................. 16\n24 Lodgement of returns .................................................................... 16\n25 Approved forms and manner ......................................................... 17\n26 Regulations.................................................................................... 17\n27 Review of Act................................................................................. 18\nPart 7 Transitional matters for Petroleum Royalty\nAct 2023\n28 Royalty agreements under Petroleum Act 1984 ............................ 18\nENDNOTES\n\nNORTHERN TERRITORY OF AUSTRALIA\n____________________\nAs in force at 2 July 2023\n____________________\nPETROLEUM ROYALTY ACT 2023\nAn Act to impose a royalty on petroleum produced in the Northern Territory\nand for related purposes\nPart 1 Preliminary matters\n1 Short title\nThis Act may be cited as the Petroleum Royalty Act 2023.\n2 Commencement\nThis Act commences on 1 July 2023.\n3 Purpose\nThe purpose of this Act is to provide for a royalty payable on\npetroleum produced from a project area.\nPart 2 Interpretation\n4 Definitions\nIn this Act:\nallowable costs, see section 18.\napproved means approved under section 25.\nAustralian Dollar Equivalent, see section 12(1).\nCommissioner of Territory Revenue means the person holding or\nacting in the office of Commissioner of Territory Revenue under the\nTaxation Administration Act 2007.\ndeductible costs, see section 17.\n\nPart 2 Interpretation\nPetroleum Royalty Act 2023 2\ndeduction cap, for petroleum produced from a project area, means\n75% of the sales value of the petroleum.\nentity means any of the following:\n(a) a body corporate;\n(b) a partnership;\n(c) an unincorporated body;\n(d) an individual;\n(e) for a trust that has only one trustee – the trustee;\n(f) for a trust that has more than one trustee – the trustees\ntogether.\nexchange rate, see section 12(2).\nexcluded costs, see section 19.\nexploration permit, see section 5(1) of the Petroleum Act 1984.\nexploration permit area, see section 5(1) of the Petroleum\nAct 1984.\nexploration project area means one or more exploration permit\nareas operated by or on behalf of one or more permittees as a\nsingle integrated project.\nfirst saleable point, in relation to petroleum, means the earlier of:\n(a) the point when the petroleum is first sold or disposed of in an\nopen commercial market after production at the wellhead; and\n(b) the point when the petroleum is processed into a petroleum\nproduct.\ngross value at the wellhead, see section 13.\nincurred means:\n(a) in the case of a capital allowance deduction under\nsection 18(1)(e) – incurred only at the time the cost or\nexpense constitutes a deduction under the Income Tax\nAssessment Act 1997 (Cth); or\n(b) in the case of any other cost or expense – paid or payable.\nlicence, see section 5(1) of the Petroleum Act 1984.\n\nPart 2 Interpretation\nPetroleum Royalty Act 2023 3\nlicence area, see section 5(1) of the Petroleum Act 1984.\nlicensee, see section 5(1) of the Petroleum Act 1984.\nmarket value, see section 15.\noperator means:\n(a) in the case of a licence – a person appointed by the licensee\nto undertake petroleum production in a licence area on behalf\nof the licensee; and\n(b) in the case of an exploration permit – a person appointed by\nthe permittee to undertake petroleum exploration or production\nin an exploration permit area on behalf of the permittee.\npermittee, see section 5(1) of the Petroleum Act 1984.\npetroleum, see section 5(1) of the Petroleum Act 1984.\npetroleum facility means a facility that is:\n(a) located in the Territory downstream from a wellhead; and\n(b) used for the processing, refining, storage or transport of\npetroleum.\nExample for definition petroleum facility\nA pipeline.\npetroleum product means any product able to be sold or disposed\nof that is processed, extracted, recovered or derived from\npetroleum, including crude oil, condensate and processed natural\ngas.\npost-wellhead activity means an activity that occurs after\npetroleum is produced at the wellhead in a project area and before\nits first saleable point.\npost-wellhead facility means a petroleum facility used for a\npost-wellhead activity.\nprocessed natural gas includes liquefied natural gas.\nproduce, in relation to petroleum, see section 5(1) of the Petroleum\nAct 1984.\nproduction licence, see section 5(1) of the Petroleum Act 1984.\n\nPart 2 Interpretation\nPetroleum Royalty Act 2023 4\nproduction project area means:\n(a) one or more licence areas operated by or on behalf of one or\nmore licensees as a single integrated project to produce\npetroleum; or\n(b) one or more licence areas operated, under one or more\nlicences together with one or more exploration permits, by or\non behalf of one or more licensees together with one or more\npermittees as a single integrated project to produce\npetroleum.\nproject area means:\n(a) an exploration project area; or\n(b) a production project area.\nquarter means the 3-month period ending on the last day of March,\nJune, September or December in any year.\nrelated body corporate, in relation to a body corporate, see\nsection 9 of the Corporations Act 2001 (Cth).\nrelated entity, in relation to a body corporate, see section 9 of the\nCorporations Act 2001 (Cth).\nrelated party, of a person, means:\n(a) a related body corporate of the person; or\n(b) a related entity of the person; or\n(c) a joint venture or other entity that is led by the person or a\nrelated body corporate or related entity of the person.\nretention licence, see section 5(1) of the Petroleum Act 1984.\nroyalty means the royalty payable under this Act on petroleum.\nroyalty year, in relation to a licensee or permittee, for a project\narea, means the 12-month period for which the accounts of the\nlicensee or permittee are ordinarily made up.\nsales value, see section 14.\nshipping costs, see section 16.\nthird party, in relation to a person, means another person who is\nnot a related party of the person.\n\nPart 3 Petroleum royalties\nPetroleum Royalty Act 2023 5\nwell, see section 5(1) of the Petroleum Act 1984.\nwellhead, see section 5(1) of the Petroleum Act 1984.\nNote for section 4\nThe Interpretation Act 1978 contains definitions and other provisions that may be\nrelevant to this Act.\n5 Arm's length terms\nA transaction entered into by a party is on arm's length terms if the\nterms of the transaction are no less favourable to the party than\nthose that would be agreed to by a third party in an arm's length\ntransaction under similar circumstances.\n6 Leases under Petroleum (Mining and Prospecting) Act 1954\nThis Act also applies in relation to any lease granted or renewed\nunder the Petroleum (Mining and Prospecting) Act 1954, that is in\neffect on 1 July 2023, and any holder of the lease, in the same\nmanner as it applies to a licence and a licensee respectively.\nPart 3 Petroleum royalties\n7 Commencement of royalty\n(1) A royalty is payable under this Act on petroleum produced from a\nproject area as follows:\n(a) in the case of petroleum to which a royalty agreement applied\nimmediately before 1 July 2023 – on and from the day the\nroyalty agreement is terminated;\n(b) in the case of petroleum to which a determination, made by\nthe Minister under section 84(2) of the Petroleum Act 1984,\napplied immediately before 1 July 2023 – on and from the day\nthe determination ends;\n(c) in any other case – on and from 1 July 2023.\n(2) In this section:\nroyalty agreement means an agreement that:\n(a) was made between a licensee and the Minister under\nsection 84(2) of the Petroleum Act 1984; and\n(b) was in force before 1 July 2023; and\n\nPart 3 Petroleum royalties\nPetroleum Royalty Act 2023 6\n(c) is about the gross value of petroleum produced from a licence\narea.\n8 Royalty on petroleum produced\n(1) All licensees and permittees with a licence or exploration permit in a\nproject area are liable to pay to the Territory a royalty on petroleum\nproduced from the project area in the royalty year at the rate\nprovided in section 9.\n(2) For subsection (1), petroleum produced from a project area\nincludes petroleum, produced from a production project area, that is\nused or lost through venting or flaring or other means.\n(3) For subsection (1), petroleum produced from a project area does\nnot include any of the following:\n(a) petroleum used by the licensee, permittee or operator for\nincidental purposes;\n(b) petroleum used in the project area for processing or\ncompression, or preparing petroleum for sale;\n(c) petroleum returned or reinjected into a natural reservoir in the\nproject area from which it was extracted or recovered;\n(d) petroleum produced from an exploration project area that is\nused or lost through venting or flaring or other means.\nExamples for subsection (3)(a)\nHeating and lighting buildings to provide employee accommodation or social\namenities.\n9 Royalty rate\nThe royalty rate for petroleum produced from a project area is 10%\nof the gross value of the petroleum at the wellhead.\n10 Royalty payments\nAll licensees and permittees for a project area must pay the royalty\nfor a royalty year:\n(a) by quarterly payments within 30 days after the end of each\nquarter; or\n(b) in accordance with any other arrangement the Commissioner\nof Territory Revenue approves.\n\nPart 4 Calculation of gross value at the wellhead\nPetroleum Royalty Act 2023 7\n11 Amount of quarterly payments\n(1) The quarterly payments, other than the final quarterly payment, of a\nroyalty for a royalty year is calculated on the gross value at the\nwellhead of the petroleum produced in the quarter.\n(2) The calculation of the gross value at the wellhead under\nsubsection (1) is determined in accordance with section 13 as if a\nreference in that section to the royalty year were a reference to a\nquarter.\n(3) The amount of the final quarterly payment for the royalty year is the\nbalance of the royalty payable for the royalty year in accordance\nwith the royalty return.\nPart 4 Calculation of gross value at the wellhead\n12 Meaning of Australian Dollar Equivalent and exchange rate\n(1) The Australian Dollar Equivalent, in relation to an amount of\nmoney that is stated in a foreign currency, means the amount\ndetermined by converting the foreign currency amount into\nAustralian dollars at the exchange rate applying at the time the\nforeign currency amount was earned, receivable or incurred.\n(2) The exchange rate, in relation to an amount of money that is\nstated in a foreign currency, means one of the following rates\nselected by the licensee, permittee or operator in good faith and on\na consistent basis:\n(a) the closing daily representative rate for the relevant day, as\npublished by the Reserve Bank of Australia;\n(b) the buy rate for the foreign currency, as quoted by a major\nAustralian trading bank;\n(c) another rate agreed in writing between the licensee or\npermittee and the Commissioner of Territory Revenue.\n13 Meaning of gross value at the wellhead\n(1) The gross value at the wellhead, of petroleum produced from a\nproject area in a royalty year, means the sales value of the\npetroleum, minus the lesser of the following:\n(a) the deductible costs of the petroleum in the royalty year;\n(b) the deduction cap for the petroleum for the royalty year.\n\nPart 4 Calculation of gross value at the wellhead\nPetroleum Royalty Act 2023 8\n(2) Subject to subsection (3), any amount or value that affects the\ncalculation of the gross value at the wellhead is calculated\nexclusive of GST.\n(3) The amount or value of an acquisition that relates to a supply that is\ninput taxed is calculated inclusive of GST.\n(4) In this section:\nacquisition, see section 11-10 of the A New Tax System (Goods\nand Services Tax) Act 1999 (Cth).\nGST, see section 195-1 of the A New Tax System (Goods and\nServices Tax) Act 1999 (Cth).\ninput taxed, see section 9-30 of the A New Tax System (Goods\nand Services Tax) Act 1999 (Cth).\nsupply, see section 9-10 of the A New Tax System (Goods and\nServices Tax) Act 1999 (Cth).\n14 Meaning of sales value\n(1) The sales value, of petroleum produced from a project area in a\nroyalty year, is the revenue received or receivable for the\npetroleum, minus the shipping costs of the petroleum.\n(2) Despite subsection (1), the sales value of the petroleum is the\nmarket value of the petroleum if:\n(a) no revenue is received or receivable by the licensee,\npermittee or operator for the sale of the petroleum; or\n(b) the petroleum is, in the royalty year:\n(i) not sold; or\n(ii) sold as a petroleum product that was further refined or\nprocessed after the first saleable point; or\n(c) the sale of the petroleum is not on arm's length terms.\n(3) In this section:\nrevenue, received or receivable for the petroleum, means:\n(a) the gross proceeds received or receivable by the licensee,\npermittee, operator or related party (or applied to their benefit)\nin Australian dollars or Australian Dollar Equivalent for the\npetroleum; or\n\nPart 4 Calculation of gross value at the wellhead\nPetroleum Royalty Act 2023 9\n(b) the proceeds received from an insurer in the case of loss of, or\ndamage to, the petroleum, net of any excess or deductible\npaid in relation to the loss.\n15 Meaning of market value\n(1) The market value, of petroleum produced from a project area, is\nthe price (in Australian dollars or Australian Dollar Equivalent) that\nwould be negotiated and agreed for the petroleum on the basis that\nit was sold at the first saleable point in an open commercial market\nbetween a knowledgeable, willing but not anxious buyer and a\nknowledgeable, willing but not anxious seller, acting severally and\nindependently, having regard to the following:\n(a) the price of other petroleum sold to a third party on arm's\nlength terms, that is substantially similar in time of delivery,\nkind, quality and composition;\n(b) a price agreed in an advance pricing arrangement with the\nCommonwealth Commissioner of Taxation;\n(c) a price audited and approved by the Commonwealth\nCommissioner of Taxation;\n(d) any applicable benchmark prices published by a recognised\ncommodities exchange or index that the Commissioner of\nTerritory Revenue may accept;\n(e) any other matter the Commissioner of Territory Revenue\nconsiders relevant.\n(2) In this section:\nadvance pricing arrangement means an arrangement between\nthe Commonwealth Commissioner of Taxation and a licensee,\npermittee or operator (to which there may also be other parties)\nunder which the parties agree on a transfer pricing methodology to\nbe used by the licensee, permittee or operator in accounting for the\nlicensee's, permittee's or operator's dealings with petroleum for the\npurposes of the Income Tax Assessment Act 1997 (Cth).\nCommonwealth Commissioner of Taxation, means the\nCommissioner of Taxation appointed under section 4 of the\nTaxation Administration Act 1953 (Cth).\n\nPart 4 Calculation of gross value at the wellhead\nPetroleum Royalty Act 2023 10\n16 Shipping costs\n(1) The shipping costs that are allowed in a royalty year for the purpose\nof calculating the sales value of petroleum produced from a project\narea (the shipping costs), are the following:\n(a) in the case of petroleum that is exported from Australia – all\nfreight charges, dead freight costs and marine insurance\ncosts;\n(b) in the case of petroleum that is not exported from Australia –\nthe freight and insurance costs incurred in delivering the\npetroleum to the purchaser or transferee.\n(2) For subsection (1), shipping costs do not include:\n(a) any charges mentioned in subsection (1) for which the\nlicensee, permittee or operator, or a related party of the\nlicensee, permittee or operator, received reimbursement or\ncompensation or charged to another person; or\n(b) any excluded costs.\n(3) For subsection (1), shipping costs must be incurred by:\n(a) the licensee, permittee or operator of the project area from a\nthird party directly in relation to the sale of the petroleum; or\n(b) a related party of the licensee, permittee or operator, of the\nproject area from a third party directly in relation to the sale of\nthe petroleum on arm's length terms with no mark up.\n17 Deductible costs\n(1) The amount that may be deducted in a royalty year for the purpose\nof calculating the gross value at the wellhead in relation to\npetroleum produced from a project area (the deductible costs), is\nthe amount calculated in accordance with the formula in\nsubsection (2) and as provided by subsection (3).\n(2) The formula is:\nDC = AC + CFD – R\nwhere:\nDC is the amount of the deductible costs.\nAC is the amount of the allowable costs.\n\nPart 4 Calculation of gross value at the wellhead\nPetroleum Royalty Act 2023 11\nCFD is the amount of the balance of any deductions allowed to be\ncarried forward under subsection (3).\nR is the amount of any allowable costs the licensee, permittee or\noperator has received as reimbursement or compensation.\n(3) If the amount of the deductible costs of petroleum produced in a\nproject area in a royalty year exceeds the deduction cap, the\namount of the excess may be:\n(a) carried forward; and\n(b) applied as a deductible cost in a later royalty year.\n18 Allowable costs\n(1) Subject to subsection (2), the costs that are allowed in a royalty\nyear for the purpose of calculating deductible costs under this Act in\nrelation to petroleum produced from a project area (the allowable\ncosts) are the following:\n(a) a pipeline tariff for transporting the petroleum through a\npipeline to its first saleable point;\n(b) a processing plant toll or other charge for processing the\npetroleum before its first saleable point;\n(c) field gathering costs to transport the petroleum from the\nwellhead to processing or storage facilities;\n(d) the operating costs of a post-wellhead activity that is directly\nrelated to:\n(i) the treatment, processing, refining or storage of the\npetroleum; or\n(ii) transporting the petroleum;\n(e) a capital allowance deduction incurred by the licensee,\npermittee or operator on a post-wellhead facility calculated in\naccordance with:\n(i) if Australian income tax treatment applies to the\npetroleum – the applicable Australian income tax\ntreatment of the facility; or\n(ii) if no Australian income tax treatment applies to the\npetroleum – a method approved in writing by the\nCommissioner of Territory Revenue;\n\nPart 4 Calculation of gross value at the wellhead\nPetroleum Royalty Act 2023 12\n(f) a cost or expense directly related to a post-wellhead activity in\nrelation to any of the following:\n(i) operating or maintaining an office in the Territory;\n(ii) centralised services that control, influence or direct\nstrategic management of the operation of a licence area,\nif the services were performed wholly in the Territory;\n(iii) labour, employee and personnel costs, including travel\nand ancillary costs, in relation to an employee or\ncontractor working solely in the Territory:\n(A) in the period to which the cost or expense relates;\nand\n(B) for the period the employee or contractor was\nremunerated.\n(2) For subsection (1), allowable costs must:\n(a) be incurred by a licensee, permittee or operator, or a related\nparty to the licensee, permittee or operator, in relation to the\npetroleum in the royalty year; and\n(b) not be shipping costs or excluded costs; and\n(c) be directly related to a post-wellhead activity; and\n(d) be incurred on arm's length terms.\n19 Excluded costs\n(1) The costs that are excluded for the purposes of calculating shipping\ncosts or deductible costs under this Act in relation to petroleum\nproduced from a project area (the excluded costs) are the\nfollowing:\n(a) costs and expenses incurred in relation to any of the following:\n(i) exploring for the petroleum or discovering the petroleum;\n(ii) marketing or selling the petroleum, including fees,\ncommission, brokerage or an amount paid to a\ndistributor or agent;\n(iii) maintaining a petroleum facility during an extended or\npermanent shutdown of the facility;\n(iv) decommissioning, rehabilitation or abandonment of the\nproject area or a petroleum facility;\n\nPart 4 Calculation of gross value at the wellhead\nPetroleum Royalty Act 2023 13\n(v) complying with a law of the Territory, the\nCommonwealth, a State or another Territory, including\ncosts and expenses related to guarantees, securities or\ninsurance imposed or required under the law;\n(vi) salaries, allowances, termination payments, other similar\npayments or benefits, employer contributions to\nsuperannuation schemes and wages in respect of an\nemployee or contractor for a pay period during which the\nemployee or contractor:\n(A) did not work solely in the Territory; or\n(B) was not engaged primarily in work that was directly\nattributable to the production of petroleum in the\nTerritory;\n(b) office expenses that:\n(i) do not relate to an office in the Territory; or\n(ii) are not for work services performed solely in the\nTerritory;\n(c) fees for management services that:\n(i) are not performed solely in the Territory; or\n(ii) are not directly attributable to the production of\npetroleum in the Territory;\n(d) travel and ancillary costs in relation to an employee, contractor\nor other worker whose principal place of residence is outside\nthe Territory;\n(e) interest and financing costs;\n(f) foreign exchange gains or losses;\n(g) hedging costs;\n(h) costs associated with bad debts;\n(i) asset revaluation gains or losses;\n(j) royalties or similar payments;\n(k) taxes, levies or fees imposed or payable under a law of the\nTerritory, the Commonwealth, a State or another Territory;\n\nPart 4 Calculation of gross value at the wellhead\nPetroleum Royalty Act 2023 14\n(l) costs of negotiating with land holders or with persons related\nto the Native Title Act 1993 (Cth), including payments or\ncompensation paid under an access agreement or native title\nagreement;\n(m) amounts payable in relation to a breach of a legal or statutory\nobligation, including a penalty or damages for breach of\ncontract.\nExamples for subsection (1)(k)\n1 Monitoring and compliance levy.\n2 Orphan well levy.\n(2) For subsection (1), if the sales value of petroleum is the market\nvalue of the petroleum under section 14(2), a deductible cost\nincurred in relation to an activity after the first saleable point of the\npetroleum is taken to be an excluded cost.\n20 Treatment of deductions, costs and expenses, revenue and\nexpenditure\n(1) An amount must not be deducted or claimed as a cost or expense\nmore than once under this Act, whether for the same royalty year or\na different royalty year, despite the amount:\n(a) falling under more than one head of deduction or cost or\nexpense under this Act; or\n(b) being reflected or capable of being reflected in the accounts\nrelating to petroleum production in more than one form.\n(2) When ascertaining the gross value at the wellhead, or sales value,\nof petroleum, an item of revenue or expenditure must be classified\nunder the most appropriate provision of this Act, even if it might\nalso be classified under another provision as revenue or as\nexpenditure.\n21 Swap arrangements\n(1) If a licensee, permittee or operator procures petroleum under a\nswap arrangement, the price received by the licensee, permittee or\noperator for the sale of the procured petroleum may be used to\ndetermine the value of the petroleum produced from a project area\nfor the licence or exploration permit if:\n(a) the parties to the swap arrangement are not related parties;\nand\n(b) the swap arrangement is on arm's length terms; and\n\nPart 5 Application of Taxation Administration Act 2007\nPetroleum Royalty Act 2023 15\n(c) the swap arrangement provides for the swap or exchange of\nrights or obligations in relation to petroleum produced by the\nparties; and\n(d) a comparable quantity and quality of petroleum is swapped or\nexchanged under the swap arrangement; and\n(e) the swap or exchange is made within 6 months after the\npetroleum is delivered or the rights vested.\n(2) The petroleum produced from the project area for the licence or\nexploration permit must be valued at market value under a swap\narrangement if:\n(a) the swap arrangement is between related parties; or\n(b) the procured petroleum is sold to a related party; or\n(c) the procured petroleum is not sold to a second buyer within\n6 months after the petroleum is delivered to the licensee,\npermittee or operator; or\n(d) subsection (1) does not otherwise apply to the petroleum.\n(3) In this section:\nprocured petroleum means petroleum procured by a licensee,\npermittee or operator under a swap arrangement.\nswap arrangement means an arrangement that:\n(a) is entered into between two petroleum producers or resellers;\nand\n(b) provides for them to swap or exchange rights or obligations in\nrelation to petroleum produced by them.\nPart 5 Application of Taxation Administration\nAct 2007\n22 Application of Taxation Administration Act 2007\nThe Taxation Administration Act 2007 applies to a royalty as if:\n(a) a reference in that Act to tax were a reference to royalty; and\n(b) a reference in that Act to taxpayer were a reference to\nlicensee or permittee; and\n\nPart 6 Miscellaneous matters\nPetroleum Royalty Act 2023 16\n(c) a reference in that Act to a taxation law included a reference\nto this Act; and\n(d) a reference in that Act to a corresponding law in Parts 9\nand 10 included a reference to a law of the Commonwealth, a\nState or another Territory corresponding to this Act.\nPart 6 Miscellaneous matters\n23 Register of licensees and permittees\n(1) A licensee or permittee must register with the Commissioner of\nTerritory Revenue within 30 days after the licensee or permittee\nstarts petroleum production under the licence or exploration permit.\n(2) A licensee or permittee must notify the Commissioner of Territory\nRevenue within 30 days after the day:\n(a) the licensee or permittee ends petroleum production during an\nextended or permanent shutdown of its operations in a project\narea; or\n(b) the licensee or permittee restarts petroleum production after\nan extended or permanent shutdown of its operations in a\nproject area; or\n(c) there is a change in ownership of the licence or exploration\npermit.\n(3) Registration and notification under this section must be in the\napproved form and the approved manner.\n(4) The Commissioner of Territory Revenue may cancel the registration\nof the licensee or permittee if:\n(a) petroleum production ends following a permanent shutdown of\nits operations under the licence or exploration permit in a\nproject area; or\n(b) the licence or exploration permit is transferred to another\nperson; or\n(c) the registration is not required for any other reason.\n24 Lodgement of returns\n(1) A licensee or permittee must lodge a royalty return with the\nCommissioner of Territory Revenue within 30 days after the end of\na royalty year for the licensee or permittee.\n\nPart 6 Miscellaneous matters\nPetroleum Royalty Act 2023 17\n(2) A licensee or permittee must also lodge a royalty return with the\nCommissioner of Territory Revenue 30 days after the day:\n(a) the licensee or permittee ends petroleum production during an\nextended or permanent shutdown of its operations in a project\narea; or\n(b) there is a change in ownership of the licence or exploration\npermit.\n(3) On application, the Commissioner of Territory Revenue may waive\nthe requirement to lodge a royalty return under subsection (2) if:\n(a) the requirement is triggered by a change in ownership of the\nlicence or exploration permit; and\n(b) the change does not interrupt the operation of the project area\nor the accounts relating to petroleum production.\n(4) A royalty return must be in the approved form.\n(5) If there is more than one licensee or permittee for a project area:\n(a) a single royalty return must be lodged for the project area; and\n(b) the licensees or permittees may authorise a person to lodge\nthe royalty return.\n(6) The lodgement of a single royalty return for a project area does not\naffect the joint and several liability of each licensee or permittee for\nthe project area to pay royalty for the petroleum production from the\nproject area.\n25 Approved forms and manner\nThe Commissioner of Territory Revenue may approve:\n(a) forms for this Act; and\n(b) the manner of registration under section 23.\n26 Regulations\n(1) The Administrator may make regulations under this Act.\nNote for subsection (1)\nSee section 65 of the Interpretation Act 1978.\n(2) A regulation may:\n(a) prescribe fees payable under this Act; and\n\nPart 7 Transitional matters for Petroleum Royalty Act 2023\nPetroleum Royalty Act 2023 18\n(b) apply, adopt or incorporate, with or without changes, the\nwhole or part of a document as in force or existing at a\nparticular time or from time to time.\n27 Review of Act\n(1) The Commissioner of Territory Revenue must review the operation\nof this Act as soon as practicable before 1 July 2028.\n(2) The review must consider the effectiveness and efficiency of the\ncalculation of royalties under this Act.\n(3) The Commissioner of Territory Revenue must prepare a written\nreport of the review for the Minister.\nPart 7 Transitional matters for Petroleum Royalty\nAct 2023\n28 Royalty agreements under Petroleum Act 1984\nPart III, Division 5 of the Petroleum Act 1984, as in force\nimmediately before 1 July 2023 continues to apply to a royalty\nagreement that:\n(a) was in force immediately before 1 July 2023; and\n(b) is not terminated.\n\nENDNOTES\nPetroleum Royalty Act 2023 19\nENDNOTES\n1 KEY\nKey to abbreviations\namd = amended od = order\napp = appendix om = omitted\nbl = by-law pt = Part\nch = Chapter r = regulation/rule\ncl = clause rem = remainder\ndiv = Division renum = renumbered\nexp = expires/expired rep = repealed\nf = forms s = section\nGaz = Gazette sch = Schedule\nhdg = heading sdiv = Subdivision\nins = inserted SL = Subordinate Legislation\nlt = long title sub = substituted\nnc = not commenced\n2 LIST OF LEGISLATION\nPetroleum Royalty Act 2023 (Act No. 6, 2023)\nAssent date 6 April 2023\nCommenced 1 July 2023 (s 2)\n3 LIST OF AMENDMENTS\npt 8 hdg rep No. 6, 2023, s 36\nss 29 – 36 rep No. 6, 2023, s 36","sortOrder":0}],"analysis":{"issue_detection":{"absurdities":[{"type":"impossible_compliance","section":"Sections 4, 23(3) and 25","severity":"high","reasoning":"Section 4 defines “approved” as approved under section 25. Section 23(3) requires registration and notification to be in the approved manner. Section 25(b) authorises the Commissioner to approve only “the manner of registration under section 23”, leaving no supplied mechanism for approving a manner of notification.","confidence":0.99,"description":"Notifications under section 23 must use an “approved manner”, but section 25 authorises approval only of the manner of registration.","source_quotes":["approved means approved under section 25.","Registration and notification under this section must be in the approved form and the approved manner.","The Commissioner of Territory Revenue may approve:\n(a) forms for this Act; and\n(b) the manner of registration under section 23."]}],"contradictions":[]},"flash_summary":{"complexity_score":7,"scope_assessment":{"changed":false,"description":"The Act implements a royalty on petroleum produced in NT project areas and preserves pre‑existing royalty agreements until they end (ss7,28). There is no textual indication within the instrument that the statutory scope was reduced or expanded beyond imposing that royalty and setting valuation, deduction and administrative rules."},"complexity_factors":["Valuation mechanics: gross value at the wellhead depends on sales value less deductible costs with a 75% deduction cap (s13; definition deduction cap in s4).","Detailed allowable vs excluded costs: multiple categories and exclusions for post‑wellhead costs, taxes, interest, hedging, native title payments and others (ss18–19).","Sales/market value rules: fallback to market value in non‑arm’s‑length, unsold or further‑processed cases, including reference to benchmarks and advance pricing arrangements (ss14–15).","Exchange‑rate choice: licensee/permittee may select among published rates or an agreed rate with the Commissioner (s12(2)), creating valuation variability and recordkeeping needs.","Swap arrangements: conditions for using swap prices vs requiring market valuation, with timing and related‑party limits (s21).","Interaction with taxation administration: Taxation Administration Act 2007 applies to enforcement, objections and administration as if royalty were a tax, increasing procedural complexity (s22).","Compliance and reporting obligations: registration, quarterly payments, annual royalty returns, possible Commissioner waivers and approved forms add administrative burden (ss10,11,23–25).","Carry‑forward rules: excess deductible costs may be carried forward against future royalties, requiring tracking across years (s17(3)).","Commissioner discretion: approvals for forms, agreed exchange rates, methods for capital allowance where Australian tax treatment does not apply, and other administrative choices (s12(2)(c),s18(1)(e)(ii),s25).","Transitional provisions: staged commencement and continued effect of pre‑existing royalty agreements until termination introduce application complexity (s7, s28)."],"plain_english_summary":"This Act charges a 10% royalty on petroleum produced in a Northern Territory project area, measured as gross value at the wellhead (sales value less allowable post‑wellhead costs, subject to a 75% deduction cap). Licensees and permittees must register, lodge returns and make quarterly payments (ss9,13,4(def’n deduction cap),23–24,10).\n\nValuation rules, permitted and excluded deductions, swap treatments and exchange‑rate choices determine who bears costs and the compliance burden; the Commissioner of Territory Revenue has approval and administrative powers (ss14–19,21,12(2)(c),25,22)."},"flash_summary_failed":{"failed":true,"reason":"Unauthenticated. Configure AI_GATEWAY_API_KEY or use a provider module. Learn more: https://ai-sdk.dev/unauthenticated-ai-gateway","source":"analysis-cron"},"kimi_summary":{"content_quality":"ok","complexity_score":6,"scope_assessment":{"changed":false,"description":"The legislation appears focused on its original purpose of imposing petroleum royalties. While it contains detailed calculation rules and transitional provisions, these are ancillary to the core function of establishing a royalty regime. There is no evidence of significant scope creep beyond the stated purpose in s3."},"complexity_factors":["27 defined terms in section 4 alone, with many cross-referencing other Acts (Petroleum Act 1984, Corporations Act 2001, GST Act, Income Tax Assessment Act 1997)","Nested conditional logic in calculating 'gross value at the wellhead' – requires calculating sales value, then deductible costs, then applying a deduction cap, with GST exclusions/inclusions","Multiple valuation methodologies depending on circumstances (sales value vs market value, with market value triggered by 3 different conditions in s14(2))","Extensive lists of allowable costs (s18), excluded costs (s19), and specific conditions for each (e.g., 'incurred on arm's length terms', 'directly related to post-wellhead activity')","Complex transitional arrangements (s7, s28) dealing with legacy royalty agreements and ministerial determinations under the old Petroleum Act 1984","Swap arrangement rules (s21) with 5 positive conditions and 4 negative triggers requiring market value fallback","Application of external legislation by reference (Taxation Administration Act 2007, Income Tax Assessment Act 1997 for capital allowances)","Formula-based calculation in s17 with carry-forward provisions for excess deductions"],"plain_english_summary":"**What this law does:**\n\nThis is a Northern Territory law that creates a new system for charging royalties (a type of tax) on petroleum (oil and gas) extracted in the Territory. It replaces older arrangements and sets out exactly how much companies must pay, how to calculate it, and when to pay.\n\n**Who it affects:**\n\n*   **Petroleum companies** – anyone with a licence or permit to explore for or produce oil and gas in the NT (called \"licensees\" and \"permittees\")\n*   **Operators** – companies running petroleum projects on behalf of licensees\n*   **The Territory Government** – which collects the revenue\n\n**Key things the law does:**\n\n*   **Sets the royalty rate at 10%** of the \"gross value at the wellhead\" – basically, 10% of the value of the petroleum when it first comes out of the ground, after certain costs are deducted\n*   **Defines how to calculate that value** – including rules for:\n    *   Converting foreign currency to Australian dollars\n    *   What counts as \"sales value\" versus \"market value\" (used when petroleum isn't sold normally, like in deals between related companies)\n    *   Which costs can be deducted (like pipeline fees, processing costs, and some capital expenses)\n    *   Which costs **cannot** be deducted (like exploration costs, marketing, interest, taxes, and native title payments)\n*   **Caps deductions at 75%** of sales value – companies can't deduct so many costs that they pay no royalty\n*   **Requires quarterly payments** – companies must pay every three months, with a final adjustment at year-end\n*   **Applies existing tax administration rules** – borrows the enforcement and compliance framework from the Territory's Taxation Administration Act 2007\n*   **Handles special situations** – including \"swap arrangements\" (where companies trade petroleum with each other) and transitional rules for old agreements made under previous laws\n\n**Why it matters:**\n\nThis law ensures the Territory gets a fair return from its natural resources. It modernises the royalty system with clearer rules about what costs count and how to value petroleum, especially in complex corporate structures where companies might try to shift profits through internal pricing. The 75% deduction cap prevents companies from wiping out their royalty obligations entirely through cost claims."}},"importantCases":[],"_links":{"self":"/api/acts/petroleum-royalty-act-2023","history":"/api/acts/petroleum-royalty-act-2023/history","analysis":"/api/acts/petroleum-royalty-act-2023/analysis","conflicts":"/api/acts/petroleum-royalty-act-2023/conflicts","importantCases":"/api/acts/petroleum-royalty-act-2023/important-cases","documents":"/api/acts/petroleum-royalty-act-2023/documents"}}