Private ruling: Petroleum Resource Rent Tax functional currency election
Date of advice: 25 July 2016
Published: September 2016

Ruling: Q1: Was Company A the head company of a designated company group pursuant to section 2BA of the Petroleum Resource Rent Tax Assessment Act 1987 (PRRTAA 1987) at the time it made its functional currency election? | A1: Yes.

Relevant facts and circumstances: • Company A has an interest in one or more petroleum projects in Australia that are subject to Petroleum Resource Rent Tax (PRRT). • Company A made its PRRT functional currency election under section 58B(1)(a) of the PRRTAA 1987. • At the time when Company A made its PRRT functional currency election, Company B did not exist • Company B has an interest in one or more petroleum projects in Australia and is a subsidiary of Company A.

Relevant legislative provisions: Petroleum Resource Rent Tax Assessment Act 1987 Section 2 | Section 2BA | Subsection 2BA(1) | Subsection 2BA(2) | Subsection 2BA(3) | Subsection 2BA(4) | Paragraph 2BA(4)(a) | Paragraph 2BA(4)(b) | Paragraph 2BA(4)(c) | Paragraph 2BA(4)(d) | Paragraph 2BA(4)(e) | Section 58B(4) | Paragraph 58B(4)(a) | Paragraph 58B(4)(b) | Paragraph 58B(4)(c) | Paragraph 58B(4)(d) | Paragraph 58B(4)(e) | Paragraph 58B(4)(f) | Paragraph 58B(4)(g)

Reasons for decision: Summary: Section 2 of the PRRTAA 1987 contains the meanings of defined terms within that Act. Section 2 provides that the 'head company of a designated company group has the meaning given by section 2BA. Subsection 2BA(1) of the PRRTAA 1987 provides that section 2BA sets out the method for identifying a designated company group for the purposes of the PRRTAA 1987. Subsection 2BA(2) provides that the first step is to identify a particular overall company group. Company A's overall company group was identified. Subsection 2BA(3) provides that the second step is to " identify all of the members of the overall company group that are entitled to derive assessable receipts in relation to a petroleum project (whether or not the same petroleum project). These members constitute a provisional designated company group . " Company A satisfied the requirements of subsection 2BA(3). Subsection 2BA(4) provides that the provisional designated company group is a designated company group (paragraph 2BA(4)(d)) and that the key company is the head company of that designated company group (paragraph 2BA(4)(e)) if the following conditions are satisfied in relation to the company (the key company): • the key company is a member of the provisional designated company group (paragraph 2BA(4)(a)), • the key company is not a subsidiary of any other company in the provisional designated company group (paragraph 2BA(4)(b)), and • each other company in the provisional designated company group is a subsidiary of the key company (paragraph 2BA(4)(c)). Company A satisfied the conditions in paragraphs 2BA(4)(a) to (c). On this basis, Company A was the head company of a designated company group at the time it made its functional currency election