The Morrison Government is delivering on its commitment to ensure the Petroleum Resource Rent Tax (PRRT) better reflects Australia's petroleum industry by releasing a consultation paper on gas transfer pricing arrangements.
In the Government’s final response to the Callaghan PRRT Review of 2 November 2018, the Government asked Treasury to lead a review of the gas transfer pricing arrangements, to consult and report back within 12 to 18 months. The consultation paper released today seeks comments on the issues identified in the Callaghan Review as well as views on how the rules will work for emerging developments in the industry. Treasury has been asked to provide advice on:
- options to reflect an appropriate distribution of rents, including when resource prices are high
- ensuring the regulations are fit for purpose into the future and compatible with emerging developments in the industry, such as liquefied natural gas (LNG) tolling arrangements and third party processing
- whether the evidence of how the regulations are applied in practice reflects an appropriate arm’s length price for gas at the taxing point, including in situations where prices and resource rents are high
- ensuring commercial transactions for parts of the LNG production chain are used as far as possible as a reference for establishing a gas transfer price
- ensuring that the regulations are neutral as far as possible between operations where the owners (or part owners) of gas process their own gas and where gas is processed by third parties
- options to improve transparency and reduce complexity in the way in which the rules operate, and
- any other related matters.
The consultation paper is available on the Treasury website and interested parties are encouraged to make a submission by 14 June 2019.