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01 Aug 12 Decision Impact Statement - Esso Australia Resources

The ATO has published a Decision Impact Statement in relation to the Full Federal Court's decision in Esso Australia Resources Pty Ltd v FCT [2012] FCAFC 5.

The case concerned the deductibility under the Petroleum Resource Rent Tax Assessment Act 1987 ("PRRTAA") of various office facility, administrative and accounting expenditures, service fees and mutualised research costs.

No deductions were allowed by the Court, which was the outcome the Commissioner was seeking. However, the Statement states that some of the views expressed about the inability to apportion expenditure between PRRT projects and other activities, and the treatment of payments made to contractors including the application of section 41, may be inconsistent with the Commissioner's views or practices.

The Statement notes that the taxpayer has applied for Special Leave to appeal to the High Court. If Special Leave is not granted, a further Decision Impact Statement will be produced that considers the Full Federal Court decision in more detail.

As litigation in respect of this matter is not concluded, the Commissioner has not withdrawn Draft Taxation Rulings TR 2010/D4, TR 2010/D5 and TR 2010/D6, parts of which contain his views of the operation of the PRRTAA in this area.

If a choice is made to lodge PRRT returns for the 2012 income year consistently with these views, as opposed to views expressed by the Full Federal Court, the Draft Taxation Rulings (excluding appendixes) will continue to provide protection from interest and penalties in the usual way.


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