The ATO on Wed 21.8.2013, released Draft Taxation Ruling TR 2013/D4, which considers the meaning of the phrase “…involved in or in connection with exploration for petroleum …” in para 37(1)(a) of the Petroleum Resource Rent Tax Assessment Act 1987 (PRRT Act). Broadly, the Draft outlines the following:
- the phrase “exploration for petroleum” in s 37 of the PRRT Act takes on its ordinary meaning which is limited to the discovery and identification of the existence, extent and nature of the petroleum;
- the words “involved in or in connection with” does not extend the ordinary meaning of “exploration for petroleum”;
- the words “in connection with” covers operations and facilities that can be shown to have a reasonably direct relationship with “exploration for petroleum” (eg activities of searching for and identifying petroleum); and
- “involved in or in connection with exploration for petroleum” does not include operations and facilities undertaken to evaluate the discovery such as whether it is economically feasible to develop or how best to develop it.
DATE OF EFFECT: When the final Ruling is issued, it is proposed to apply to payments made from the date of issue of the Draft Ruling.
Comments are due by 2 October 2013. ATO contact: Dale Clancy – Tel: (07) 3213 5666; Fax: (07) 3119 9846; Email: Dale.Clancy@ato.gov.au.
[LTN 161, 21/8/13]