Taxation aspects of climate change management measures
David LewisPricewaterhouseCoopers
The APPEA Journal 50(1) 253-266 https://doi.org/10.1071/AJ09015
Published: 2010
Abstract
Climate change is undoubtedly one of the greatest economic, social, and environmental challenges now facing the world. The present Australian Government is committed to acting on climate change and Australia’s progress towards its emissions reduction targets is being closely watched internationally. To contribute effectively to global climate change action, Australia must demonstrate its ability to implement robust and sustainable domestic emissions management legislation. The Carbon Pollution Reduction Scheme (CPRS), modelled after the cap-and-trade system, continues to be debated by our policymakers, as the Government moves to re-introduce its preferred CPRS legislative package for the third time. The advent of climate change legislation is inevitable and its impact will be far-reaching. This paper reviews the fiscal aspects of the proposed CPRS legislation in the context of the oil and gas industry, and whether it is conducive to creating incentives for appropriate climate change response by the industry.
In particular, this paper will consider:
the direct and indirect tax features specifically covered in the proposed CPRS legislation and their implications;
the areas of taxation that remain uncanvassed in the proposed CPRS legislation and aspects requiring clarification from the tax administration;
the interaction between Petroleum Resource Rent Tax (PRRT) and the CPRS measures;
the flow-on impacts to taxation outcomes resulting from proposed accounting and financial reporting responses to the CPRS legislation;
the income tax and PRRT treatment of selected abatement measures; and,
elements of a good CPRS tax strategy and compliance action plan.
David Lewis is PricewaterhouseCoopers’ national tax leader for energy and resources, and has been involved in the oil and gas industry for the past 12 years. In addition to his role as a tax advisor to many of the world’s leading oil and gas, and integrated energy and utility companies, David was employed in senior tax roles for more than seven years at ExxonMobil in Perth and Chevron in Perth and California. He has advised on a diverse range of transactions including major international mergers/acquisitions, farm-in/farm-out arrangements, due diligences, international tax structuring of inbound investments into Australia, implementing major financing and capital structures and advising on numerous PRRT matters and ATO audits. David is a qualified Chartered Accountant, with an honours degree in Taxation, and is a past member of the APPEA fiscal committee. david.r.lewis@au.pwc.com |
Kenneth Wee presented this full paper to the 50th APPEA Conference on Tuesday, 18 May in Brisbane. Kenneth is a Corporate Tax Director with PricewaterhouseCoopers in Perth and plays a key role in the firm’s Oil and Gas Focus Group nationally. He specialises in providing Australian income tax and PRRT advice to clients in the oil and gas industry, including a number of major multinational oil and gas companies. He has been extensively involved in advising on corporate and international tax structuring, buy/sell side due diligences, mergers and acquisitions, tax consolidations, cross-border financing arrangements, Taxation of Financial Arrangements and PRRT. Kenneth is a qualified Chartered Accountant, and is a regular presenter at tax technical sessions conducted by Australian professional taxation bodies. |
