Petroleum produced before 1 October 2020
To calculate your petroleum royalty liability, you first need to establish the source of the petroleum.
|Source||When royalty liability arises|
Petroleum tenure under the Petroleum and Gas (Production and Safety) Act 2004 or the Petroleum Act 1923
The return period in which the petroleum is disposed of
Any other source
The return period in which the petroleum is produced
Petroleum is disposed of when:
- it is sold
- ownership is otherwise transferred to another person
- it is flared or vented
- it is used.
Petroleum is produced when it is released or recovered to ground level from a natural underground reservoir.
The royalty rate for petroleum and gas (including oil, condensate, natural gas, LPG and coal seam methane) produced before 1 October 2020 is 12.5% of the wellhead value disposed of or produced in the return period.
Calculating the correct amount of royalty is important because we will impose a penalty of 75% of any understated liability.
The wellhead value of petroleum disposed of or produced in a royalty return period is:
- the amount that the petroleum could reasonably be expected to realise if it were sold on a commercial basis
- the sum of the following
- certain transportation and processing capital and operating costs between the wellhead and the first point of disposal (including depreciation)
- any applicable negative wellhead value.
Read the royalty ruling on determining petroleum royalty (PGA001) - that was in effect until 30 September 2020 - for information on how to calculate wellhead value.
In certain circumstances (especially where the wellhead value of petroleum cannot be readily established by reference to arm's length transactions), we may determine the value of petroleum or the amount of certain deductible expenses through a petroleum royalty decision. If you wish to apply for a petroleum royalty decision, phone the Office of State Revenue on 1300 300 734.
We will be reviewing the current depreciation arrangements, to reduce compliance costs and ensure that appropriate capital costs may be claimed.
We will adopt the following approach to claims for depreciation until a new model is ready:
- Except where noted below, we will not review depreciation claims for periods before 11 January 2016.
- Continue to calculate your depreciation deductions after 11 January 2016 on the same basis as before that date, unless we tell you differently.
- For any assets you acquire after 11 January 2016, calculate your depreciation deduction on the same basis as for similar assets before that date.
- We will review any changes you make to the way you calculate your depreciation deductions, and apply penalties if you make adjustments to benefit from these interim arrangements.
- If we have begun a review of your petroleum royalty liability before 11 January 2016, we will continue to review your depreciation claims. However, we will only make adjustments on a case-by-case basis if appropriate.
- We will continue to review your claims if we believe that you have engaged in royalty avoidance activities when making depreciation claims for past periods or during these interim arrangements.
- Find out about petroleum and gas tenures.
- Read the royalty ruling on the determination of petroleum royalty (PGA001).
- Learn about lodging royalty returns.
- Read the petroleum guide for OSR Online.
- Find previous petroleum royalty rates.