Petroleum mining rules
Clauses 97, 98, 100, 101, 213(49), (50), (72) and (73)
We support the amendments to the petroleum mining rules, with the exception of clause 213(73). The savings provision for the definition of “petroleum permit” in clause 213(73) is not appropriate.
Section DT 2 of the Income Tax Act 2007 applies to arrangements under which a taxpayer incurs petroleum exploration expenditure and subsequently receives economic reimbursement of that expenditure. The section applies to reduce the deductions for petroleum exploration expenditure to the extent of the economic reimbursement.
Section DT 2 is not intended to apply to an arrangement under which petroleum exploration expenditure has been allowed and related property transferred and the consideration derived is fully liable for income tax.
However, section DT 2 should continue to apply to such arrangements entered into before the introduction of the bill to the extent non-taxable economic reimbursement may occur in the future.
We agree the savings provision should be amended to address the concern of the submitter about consideration derived that is fully taxable in New Zealand.
That the submission be accepted, subject to officials’ comments.