Petroleum Resource Rent Tax: deductibility of payments made to contractors and others to procure the carrying on or providing of operations, etc. in relation to a petroleum project

This Ruling explains: • the characterisation of payments made by a person (the taxpayer) to procure the carrying on or providing of operations, facilities or other things by another person (such as a contractor) in relation to a petroleum project as provided in section 41 of the Petroleum Resource Rent Tax Assessment Act 1987 (PRRTAA); • when the payments become deductible expenditure of the taxpayer; • the interaction between section 41 and section 44 of the PRRTAA; and • the distinction between expenditure incurred on behalf of the taxpayer and other expenditure incurred in the course of providing operations, facilities or other things for the taxpayer.

The Ruling is withdrawn as a consequence of the Full Federal Court decision in Esso Australia Resources Pty Ltd v. Commissioner of Taxation [2012] FCAFC 5. For details of the Commissioner's approach to administering the law as a consequence of that decision, refer to the Decision Impact Statement.

In addition, the Commissioner proposes to issue advice by way of a public ruling on the implications of the Full Federal Court decision and is also considering what advice or guidance (if any) to provide on other matters covered in the Ruling, but not covered by the decision.