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Monday, 15 October 1973
Page: 2122

Mr Snedden asked the Minister for Minerals and Energy, upon notice:

(1)   With reference to his statements that the Commonwealth has contributed $4 19m towards the oil exploration program in Australia, does the calculation of subsidy allow for amounts that have been paid back or will be paid back in the future; if so, in what way has the calculation been derived.

(2)   Does the figure of $4 19m derive from calculations of money contributed and assessed from individual personal income tax returns or from gross amounts nominated by companies or both; if so, in what way are these figures derived.

(3)   Does the figure of $4 19m include potential capital writeoffs; if so, (a) what figure has been used as the basis for these calculations, and (b) in what way does the figure take into account the unsuccessful program which can never be written off.

(4)   What have been the (a) annual and (b) total amounts paid under section 77d of the Income Tax Assessment Act since its inception, and what is the projected figure for 1972-73.

Mr Connor - The answer to the right honourable member's question is as follows:

(1)   In the course of my statement on 12 April 1973 concerning 'Federal Petroleum Search Policy' I indicated that $4 19m was the estimated contribution of public revenue to oil and gas exploration to the end of 1971. Of this$174m has come from oil search subsidy payments by the Australian Government and by other forms of State and Australian Government expenditure. This included approximately$111m from oil search subsidy payments, but does not allow for almost $1m which has been refunded because of commercial discoveries and other adjustments. It is not possible to give an accurate figure for amounts to be paid back in future as these will depend on the extent to which existing discoveries become commercial.

(2)   I am advised that the Commissioner of Taxation estimated the total of the taxation concessions ($245m) in the following way. The cost of company concessions and the exemption of dividends was based on information extracted from company income tax returns and had regard to deductions actually allowed and deductions shown as being available for allowance in later years. The estimate in respect of the special share-holder concessions was based on amounts declared by petroleum exploration and mining companies.


(a)   My statement of 12 April indicated that the estimated cost of the special deductions allowed in the period 1966 to 1971 and of the entitlement to future deductions for capital expenditure on exploration by companies which have discovered petroleum is $92m. Of this, an amount of $80m has been allowed in assessments and an amount of $12m represents an entitlement as at 1971 to future deductions.

(b)   The figures quoted in 3 (a) were derived from an examination of income tax returns of companies which have discovered petroleum in commercial quantities. The figures do not include the cost of potential deductions available to those companies which are not yet petroleum producers.

(4)   (a) and (b) Section 77d was introduced in 1969 and the Commissioner of Taxation has estimated that the costs to revenue of this concession in respect of petroleumexploration and mining in the three years ended 30 June 1970, 1971 and 1972 were $14m, $10m and $9m respectively making a total of $33m. No figures are available for 1972-73.

A forerunner to that Section (77a) provided a similar concession for petroleum exploration and mining companies from 1959 to 1969. The Commissioner of Taxation estimates that the cost to revenue of that concession was $82m over the period.

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