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Wednesday, 10 September 2003
Page: 19647

Mr SLIPPER (Parliamentary Secretary to the Minister for Finance and Administration) (10:55 AM) —I am happy to enlighten the members of the opposition that the government does not accept the amendments to Taxation Laws Amendment Bill (No. 8) 2002 moved by the member for Kingston and supported by the member for Rankin.

I would just like to outline a couple of facts, though, for those honourable members who are interested. There are currently 36 active production licences in areas subject to the petroleum resource rent tax. Estimates of the revenue impact of the potential closing-down costs of infrastructure from such licences has been costed as ranging from $0.28 million to $56 million, depending on the size of the field. These are estimates of deductions available under the current law and do not represent the revenue implications associated with the proposed amendment. The amendment only brings forward an already eligible deduction. That is, the only cost to revenue relating to this amendment is the potential timing cost from allowing the deduction at the time the production licence ceases, rather than when the infrastructure licence ceases. As we are not aware of any platforms that might operate under an infrastructure licence, it is not possible to identify the revenue impact from the changed timing of the PRRT receipts or refunds.

The objective of the infrastructure licence proposal is to remove a potential taxation impediment to petroleum products converting from operation under a production licence to operation under an infrastructure licence. A key principle underpinning the petroleum resource rent tax regime is that closing down costs of infrastructure associated with the production licence are eligible for PRRT purposes to the extent of assessable PRRT receipts and PRRT paid in previous years. Any future economic value of the production facility is assessable as PRRT income when the operations are transferred to an infrastructure licence.

The government measure recognises, for PRRT purposes, the future closing down costs of a project facility when it ceases to be used in relation to a production licence but continues to be used under an infrastructure licence. In such cases, the estimated closing down costs are recognised in calculating the assessable income from the sale or transfer of the facility. Without this measure there will be a marked disincentive in converting to an infrastructure licence. Operators will remain assessable for PRRT purposes on the future economic value of the production facility, but a deduction for future closing down costs would be deferred until the infrastructure licence ceases. As I said at the outset, the government will not be supporting the opposition amendments.