Australian Treasurer Jim Chalmers has announced changes to the Petroleum Resource Rent Tax (PRRT) to increase the tax paid by the offshore LNG industry—a move that could amass extra revenue of $2.4 billion over the next four fiscal years.
Related article: “A rotten decision”: NT approves Beetaloo fracking
According to Reuters, the government will adopt eight of 11 recommendations from a Treasury review of gas transfer pricing rules, including a key proposal to limit the proportion of PRRT assessable income on LNG projects that can be offset by deductions to 90% from July 1.
“Under the current rules, most LNG projects are not expected to pay any significant amounts of PRRT until the 2030s. The changes announced today address this issue,” Chalmers said in a statement.
Other changes to be introduced over the next two financial years include equalising the treatment of notional upstream and downstream entities so that losses will be split evenly rather that attributed entirely to the upstream entity.
Chalmers said the government would concurrently proceed with eight recommendations from a separate earlier review that were accepted by the previous LNP government but not enacted.
Chalmers said both reviews had found that aspects of the PRRT were better suited to oil projects than LNG projects, and the deductions cap and other changes would help address that.
Related article: Australia to legislate national Net Zero Authority
“These changes will mean the offshore LNG industry pays more tax, sooner, (and) will provide industry and investors policy certainty to allow the sufficient supply of domestic gas, and will ensure Australia remains a reliable international energy supplier and investment partner,” Chalmers said.
