Australia: Petroleum resource rent tax deductions cap in effect from 1 July 2023

ATO update on the petroleum resource rent tax (PRRT) deductions

07 June 2024

The Australian Taxation Office (ATO) has published an update on the petroleum resource rent tax (PRRT) deductions cap, which is effective from 1 July 2023.

The ATO advises businesses “involved in petroleum projects that produce liquefied natural gas” to understand how the deductions cap applies to them and the specific conditions they need to meet.

If the cap applies, businesses will have a taxable profit of 10% of the assessable receipts derived from the project in the relevant tax year, limiting deductible expenditure to 90% of the project’s assessable receipts in that tax year.

Projects won't be subject to the cap until seven years after the year of first production or 1 July 2023, whichever is later.

Read the ATO release (5 June 2024)

Print friendly version

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 3712, 1801 K Street NW, Washington, DC 20006.