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Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Bill 2024

Published Date: 30 Apr 2024


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Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Bill 2024

The Tax Institute welcomes the opportunity to make a submission to the Senate Economics Legislation Committee (Committee) in respect of its inquiry and report on the Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Bill 2024 (Bill) and accompanying explanatory memorandum (EM).

Part 1 of Schedule 3 to the Bill clarifies the tax treatment of ‘exploration’ and ‘mining, quarrying and prospecting rights’ (MQPRs) in the Petroleum Resource Rent Tax Assessment Act 1987 (Cth) (PRRT Act) and the Income Tax Assessment Act 1997 (Cth), respectively. Part 2 of Schedule 3 to the Bill proposes to amend the meaning of the phrase ‘exploration for petroleum’ in section 37 of the PRRT Act. The proposed amendments to section 37 of the PRRT Act will have a retrospective effect, affecting expenses incurred from 21 August 2013 and PRRT years starting on or after 1 July 2013.

Our comments in this submission are limited to the proposed start date of the Part 2 of Schedule 3 amendments, and the consequences of retrospective application of the law.

The Tax Institute welcomes the new provision (Item 10 of Part 2 to Schedule 3) in the Bill that safeguards taxpayers against retrospective criminal liability, ensuring that such liability does not arise due to the retrospective nature of the amendments to section 37 of the PRRT Act. Also, the EM now includes examples to explain the concepts further.

Our main concerns relate to the proposed amendments to section 37 of the PRRT Act. In summary:

  • the proposed amendments narrow the interpretation of the phrase ‘exploration of petroleum’ compared to the previous widely accepted understanding, resulting in the denial of deductions that were previously available for the taxpayers since 2013;
  • while the EM suggests that the revision to section 37 of the PRRT Act aligns with the Commissioner's view in Taxation Ruling 2014/9 – Petroleum resource rent tax: what does ‘involved in or in connection with the exploration of petroleum’ mean? (TR2014/9), and there is evidently a common theme between the two, the amending provision (Item 8 Part 2 Schedule 3) does not use the same language as the ruling. This creates uncertainty and the risk that a different test will be enacted to that which is contained in the ruling;
  • the proposed retrospective change may result in the nullification of transfer notices issued by impacted taxpayers, resulting in strict liability offences under the PRRT Act for non-compliance with the exploration loss transfer provisions. This could also lead to increased uncertainty surrounding the classification of exploration-related expenses since 2013. Although relief from retrospective criminal liability is potentially provided, taxpayers bear the burden of proving their eligibility for such relief; and
  • overall, the proposed retrospective amendment to section 37 of the PRRT Act may result in a multitude of complex legal and financial issues for affected taxpayers, potentially diminishing Australia's appeal as an attractive investment destination in the resource sector.

If retrospective law change is required to ensure taxpayers are not adversely impacted by the decision of the Full Federal Court in Commissioner of Taxation v Shell Energy Holdings Australia Limited [2022] FCAFC 2 (Shell), this should be limited to changes that are necessary to achieve this outcome. The amendments should not go further so as to leave taxpayers in a potentially non-compliant historical position, particularly where they have managed their tax affairs consistent with pre-existing law and guidance.

Our detailed response is contained in Appendix A.

The Tax Institute is the leading forum for the tax community in Australia. We are committed to shaping the future of the tax profession and the continuous improvement of the tax system for the benefit of all. In this regard, The Tax Institute seeks to influence tax and revenue policy at the highest level with a view to achieving a better Australian tax system for all.


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Unless expressly stated, opinions are not that of The Tax Institute, which accepts no responsibility for the accuracy of any of the information contained within it.

The Tax Institute
(ABN 45 008 392 372 (PRV14016))


The Tax Institute is a Recognised Tax Agent Association (RTAA) under the Tax Agent Services Regulations 2009. 

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