The Albanese Government will consult on regulations to improve the integrity of the Petroleum Resource Rent Tax regime by updating it to cover new business practices, as recommended by the Gas Transfer Pricing Review.
These regulations will implement one component of our PRRT reforms, which will mean the offshore LNG industry pays more tax, sooner.
Under proposed regulations out for consultation today, we will update the Petroleum Resource Rent Tax Assessment Regulation 2015 to account for the new practice of ‘tolling’ in the offshore LNG sector – an emerging practice whereby companies that own LNG facilities process, transport or store gas in exchange for a ‘toll fee’.
The changes will improve certainty by ensuring that a commercially negotiated toll fee can be used in calculating PRRT liability.
To prevent the use of tolling arrangements in tax avoidance, the regulations we’re proposing protect the integrity of the PRRT regime by requiring companies to apply to the Commissioner of Taxation to determine an appropriate arm’s length price where a company cannot demonstrate a toll fee was negotiated fairly.
This will prevent companies from manipulating toll fees to artificially reduce PRRT payable.
Draft regulations for consultation and feedback are available on Treasury’s website until 9 February 2024.
The Government will consult on draft legislation and regulations implementing the remaining elements of its response to the Gas Transfer Pricing Review in early 2024, including strengthening the PRRT anti-avoidance rules.