Inquiry into Australia’s oil and gas reserves

Articles Written by Peter Rose (Partner), Cloe Woodward (Associate), Heather Pym (Associate)

The Senate referred an inquiry into Australia’s oil and gas reserves to the Senate Economics References Committee on 19 September 2019. The reporting date for the inquiry has been extended to 2 December 2021.

The inquiry’s full terms of reference indicate that it will investigate:

a)            arrangements used by other countries to maximise the benefit to the public of national oil and gas reserves;

b)           an arrangement that could be considered to maximise benefit to the public of Australia's national oil and  gas resources, cognisant of:

(i)       sovereign risk,

(ii)      existing property rights, and

(iii)      federal and state jurisdictions; and

c)         any related matters.

The basis for the inquiry is concern around the tax treatment of the industry raised by South Australian Senator Rex Patrick. Rates of corporate tax and petroleum rent resource tax are sticking points between oil and gas companies and various commentators who have suggested that low tax rates are caused by an undervaluation of gas within the gas transfer pricing rules.

The inquiry is also interested in the tax environment for oil and gas in other jurisdictions, with Senator Patrick referencing the approach taken in Norway, Mexico and Saudi Arabia in particular. As such, the Senate standing committee will analyse the approaches taken elsewhere and develop recommendations maximising benefit to the public.

To date the inquiry has received 40 submissions from major oil and gas companies, tax institutes and other concerned groups.

Given the passage of time since submissions were first closed in November 2019, submissions and supplementary submissions have now been re-opened, and will be accepted until 3 September 2021.

Important Disclaimer: The material contained in this article is comment of a general nature only and is not and nor is it intended to be advice on any specific professional matter. In that the effectiveness or accuracy of any professional advice depends upon the particular circumstances of each case, neither the firm nor any individual author accepts any responsibility whatsoever for any acts or omissions resulting from reliance upon the content of any articles. Before acting on the basis of any material contained in this publication, we recommend that you consult your professional adviser. Liability limited by a scheme approved under Professional Standards Legislation (Australia-wide except in Tasmania).

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