Commonwealth legislation

Petroleum Resource Rent Tax Assessment Regulations 2024

In ForceCTH

Jurisdiction

Commonwealth

Collection

legislative instrument

Plain English Summary

9/10 complexity

This regulation sets out detailed rules for calculating how much tax petroleum companies must pay on sales gas (natural gas ready for sale) when it's sold or used in non-arm's length transactions — basically, deals between related parties where the price might not reflect true market value.

What it covers:

Two types of operations:
- GTL (Gas-to-Liquid): Where sales gas is turned into liquid products like LNG
- GTE (Gas-to-Electricity): Where sales gas is burned to generate electricity
How to work out the taxable value of sales gas:
- Comparable Uncontrolled Price (CUP): Look at what similar gas sells for in genuine arm's length deals
- Residual Pricing Method (RPM): A complex formula-based approach that works backwards from the final product value, subtracting costs and adding a profit margin
- Advance Pricing Arrangements: Pre-agreed deals with the Tax Commissioner on how to calculate values
The Residual Pricing Method explained simply:
- Start with what the final product (liquid fuel or electricity) is worth
- Subtract all the costs of processing, transport, and capital investment

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Current sections

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Sourced from the Federal Register of Legislation (legislation.gov.au), CC BY 4.0.