Proposed reforms to the Petroleum Resource Rent Tax – 8 May 2023

On 7 May 2023, the Treasurer advised of significant changes to the design of the Petroleum Resource Rent Tax (PRRT). The package of proposed changes, which include integrity reforms, is expected to increase tax receipts by $2.4 billion over the forward estimates.

The key announcements are:

• The Government has released the Petroleum Resource Rent Tax: Review of Gas Transfer Pricing Arrangements final report (GTP review) prepared by Treasury, together with the Government’s response. The Government will proceed with 8 of 11 recommendations by the GTP Review. One significant recommendation accepted is that from 1 July 2023, the Government will limit deductible expenditure to the value of 90 per cent of PRRT assessable receipts in respect of each project in the relevant income year (applied after mandatory transfers of exploration expenditure).
• Further, the Labor government’s response to the Callaghan Review, in respect to recommendations that were accepted but not implemented by the previous government has been released. The Government will proceed with 8 recommendations made by the Callaghan review.