Clarify that 'exploration for petroleum' is limited to the 'discovery and identification of the existence, extent and nature of the petroleum resource' and does not extend to 'activities and feasibility studies directed at evaluating whether the resource is commercially recoverable'.
The Government will amend the Petroleum Resource Rent Tax (PRRT) legislation to clarify that 'exploration for petroleum' is limited to the 'discovery and identification of the existence, extent and nature of the petroleum resource' and does not extend to 'activities and feasibility studies directed at evaluating whether the resource is commercially recoverable'. This measure is consistent with the Government's policy intent and the Commissioner of Taxation's administrative treatment and written binding advice as set out in TR 2014/9, which applies from 21 August 2013. The amendments will apply to all expenditure incurred from 21 August 2013. This measure will also clarify that mining, quarrying and prospecting rights (MQPRs) cannot be depreciated for income tax purposes until they are used (not merely held) and will limit the circumstances in which the issue of new rights over areas covered by existing rights lead to tax adjustments. These amendments will restore the policy intent of the law and apply in respect of all MQPRs acquired or started to be used after the date of announcement (7:30 PM (AEST) on 9 May 2023 (Budget night)). These amendments ensure the PRRT and income tax legislation operates as intended following the Full Federal Court's decision in Commissioner of Taxation v Shell Energy Holdings Australia Limited [2022] FCAFC 2. This measure is estimated to result in an unquantifiable impact on receipts over the 5 years from 2022-23.