Miscellaneous 2016

Value allocation: Upstream and downstream segments

Source: Taxation In Australia Journal Article

Published Date: 1 Aug 2016


Value allocation is required in some tax and duty assessment circumstances in respect of integrated mining or gas to liquid projects. For those projects, the value allocation exercise typically involves an intermediate point dividing, in some way, the supply chain between the upstream segment and the downstream segment. What needs to be determined at such intermediate point for tax and duty purposes is usually the notional market value of a relevant mineral or feedstock gas and/or a notional arm's length charge for access to the downstream infrastructure assets.

To illustrate how this valuation exercise is practically assessed, this article discusses the application of what is referred to as the netback method, which highlights the key principles underpinning the determination of an arm's length access charge and the market value of a commodity at an intermediate point of the supply chain for an integrated mining project.

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  • Published By: Hung Chu
  • Published On:1 Aug 2016

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Miscellaneous 2016

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