What is petroleum resource rent tax?

Companies that are interested in a petroleum project may have lodgement, reporting and payment obligations under the petroleum resource rent tax (PRRT). According to the ATO, a petroleum project exists if a production licence is in force, but an entity is not liable to pay PRRT for a specific project interest until it has a taxable profit.

The PRRT is a tax on profits generated from the sale of offshore marketable petroleum commodities (MPC). Companies will need to register for PRRT if their MPCs include:

  • Stabilised crude oil,
  • Sales gas,
  • Condensate,
  • Liquefied petroleum gas,
  • Ethane,
  • Shale oil, and
  • Any product declared by regulation to be an MPC.

Registering and record-keeping for PRRT:
In the event that you are considering a petroleum project, register with the ATO under the PRRT regime and the ATO will provide you with information to help you make PRRT decisions.

As PRRT is assessed on a project basis, companies must lodge separate registration forms with the ATO for each petroleum project, exploration permit, or retention lease they undertake. Companies may combine their petroleum projects after lodging an application with the Resources Minister 90 days after their latest production licence comes into force and receiving approval.

Current lodgement obligations for companies under the PRRT scheme include:

  • lodging instalment statements and paying PRRT instalments,
  • paying PRRT and lodging PRRT returns, and
  • notifying the ATO of project choices.

How to pay PRRT:
PRRT is payable on the taxable profits made from a petroleum project. At the end of the tax year, companies will need to calculate their PRRT liability for each petroleum project they have pursued before lodging.

The PPRT regime requires four payments a year:

  • Cumulative instalment due 21 January each year.
  • Cumulative instalment due 21 April each year.
  • Cumulative instalment due 21 October each year.
  • PRRT return or final payment (if any) due 29 August each year.

For more information on whether or not your involvement in MPCs requires PRRT registration, visit the ATO website or consult with your tax accountant on your business ventures.

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