The Federal Court has determined the taxing point and consideration receivable by a taxpayer in relation to revenue it received from the sale of petroleum under the Petroleum Resource Rent Tax Assessment Act 1987 (PRRTAA).
The Court said the taxpayer was a participant in, and operator of, the Jabiru Challis-Cassini petroleum project in relation to several Production Licence Areas issued pursuant to the Petroleum (Submerged Lands) Act 1967. The Licences are in the Timor Sea, and the Project was operated by the taxpayer as a joint venture with other entities. The taxpayer’s operations included the exploration, recovery and production of petroleum within the Licences. The Licences covered 2 oil fields in the Timor Sea – the Jabiru field within AC/L1 and the Challis field within AC/L3.
Under s 22 of the PRRTAA, the “taxable profit” of the taxpayer includes the “consideration receivable, less any expenses payable, … in relation to the sale” of crude oil. Pursuant to an “Agreement for the Sale of Crude Oil”, the taxpayer sold crude oil to a company called Petro Summit Pte Ltd. Crude was sold on a shipment-by-shipment basis. Each shipment from each field was separately invoiced. The invoiced price for each shipment was calculated pursuant to a formula which used, as an integer, the arithmetic average of all the mean of quotations in the Asian Petroleum Price Index (APPI) for crude for the month containing the Bill of Lading Date (the cl 4.1 Price). The Bill of Lading Date was the day the loading hose was disconnected once the lifting of the shipment was completed.
The years ended 30 June 2006, 30 June 2007 and 30 June 2008 were in dispute. The Court had to determine whether, in calculating the taxpayer’s taxable profit under s 22 of the PRRTAA, the “consideration receivable” by the taxpayer for the sale of each Shipment of crude was the cl 4.1 Price or was it entitled to account for the “Interest Value” as a negative or subtracting amount?
The Federal Court found that, in calculating the taxpayer’s taxable profit under s 22, the “consideration receivable” by it for the sale of each shipment of crude was the cl 4.1 Price.
(PTTEP Australasia (Ashmore Cartier) Pty Ltd v FCT [2013] FCA 1175, Federal Court, Gordon J, 11 November 2013.)
[LTN 224, 19/11/13]