Evolution of the Australian fiscal landscape and its impact on oil and gas investments in Australia
Harold Payne A and Janelle Manton ADeloitte.
The APPEA Journal 53(2) 445-445 https://doi.org/10.1071/AJ12056
Published: 2013
Abstract
The oil and gas industry is among the most regulated and highly taxed sectors of the Australian economy. In recent times, the industry has been confronted with ongoing tax reforms that significantly impact the after-tax economics of projects. Examples include the introduction of the carbon pricing mechanism, the extension of the Petroleum Resource Rent Tax (PRRT) to the onshore oil and gas sector, the decision in the Esso case impacting on PRRT taxpayers, amendments to R&D tax incentives and modifications to the taxation system affecting mobile employees.
Although the Business Tax Working Group recently did not make any recommendations to broaden the tax base to fund a reduction in the company tax rate, the desire to undertake further reforms that may impact the sector remains. The year ahead will see implementation of further transfer pricing reforms, ongoing consultation and review regarding the definition of exploration expenditure, and increasing focus on corporate international tax reform in line with global trends. Any reform has the potential to have a material impact on the capital- and exploration-intensive oil and gas industry, which also relies heavily on capital funding from multinational investors.
This extended abstract analyses the recent reforms and their impact on the oil and gas sector, provides an outlook of other relevant areas of potential fiscal change, and assesses what this might mean for the Australian oil and gas industry.
Harold Payne is the tax leader (oil and gas Asia Pacific) at Deloitte Touche Tohmatsu Limited. During his 30 years’ tax consulting experience, he has advised clients (both oil and gas companies and oilfield service companies) on cross-border transactions and their Australian tax obligations. His experience has included advising oil and gas companies about the acquisition of assets or companies in Australia, joint ventures and contract negotiations, preparing submissions on legislative changes, and ATO rulings. He has also been a regular presenter of international tax and oil and gas taxation matters both in Australia and overseas. He has a BCom and he is an affiliate of the Institute of Chartered Accountants in Australia. Member: Tax Institute of Australia. |
Janelle Manton is an account director in the oil and gas tax group at Deloitte. She has more than 12 years of tax consulting experience, specialising in corporate and international tax in Australia and overseas. She has developed expertise in advising clients in the oil and gas sector, regarding corporate income tax and PRRT matters. Her experience includes: advising clients about the acquisition of oil and gas project interests—including due diligence reviews, assistance with preparing submissions on legislative changes, and the provision of various tax-management consulting services, such as tax-risk management and project management and implementation. She has an LLB and a BCom. Member: Institute of Chartered Accountants (Australia and Ireland). |
References
APPEA, 2012—Advancing Australia: harnessing our comparative energy advantage. Deloitte Access Economics report, June 2012. Australia: Deloitte.Business Tax Working Group (BTWG), 2012—Business Tax Working Group: final report. Canberra, Australia: The Treasury, Australian Government.
OECD, 2013a—Inventory of estimated budgetary support and tax expenditures for fossil fuels 2013. Paris, France: OECD Publishing.
OECD, 2013b—Taxing energy use: a graphical analysis. Paris, France: OECD Publishing.
The Treasury, 2012—Tax reform: road map. Canberra, Australia: The Treasury, Australian Government.
