Commonwealth Consolidated Acts Commonwealth Consolidated ActsSubsection 3(1)
(definition of
relevant resource
rent royalty agreement )
1. A resource rent royalty agreement between a State and a person or persons (in this Schedule referred to as the producer ) shall provide--
(a) that a royalty is payable by the producer to the State in respect of the market petroleum produced from a production unit specified in the agreement on and after 1 July in a year after 1984 specified in the agreement (in this clause referred to as the "relevant petroleum");
(b) that the royalty in respect of the relevant petroleum disposed of in a financial year is--
(i) except where sub - paragraph ( ii) applies--40% of the accumulated net receipts from the relevant petroleum disposed of in that year; or
(ii) where the accumulated net receipts from the relevant petroleum disposed of in that year is nil or less--nil;
(c) that revenue from the royalty shall be shared between the Commonwealth and the State in accordance with a relevant revenue - sharing agreement between the Commonwealth and the State;
(d) that no other royalty or charges imposed by the State shall be payable to the State in respect of petroleum produced, during the period to which the agreement applies, from the production source in that production unit;
(e) for provisional royalty payments during each financial year to which the agreement applies, other than a financial year that ended before the agreement was entered into;
(f) that--
(i) as soon as practicable after the end of each financial year to which the agreement applies, the producer shall give the State Minister sufficient information to enable the State Minister to ascertain the amount of the royalty payable in respect of the relevant petroleum disposed of during that financial year;
(ii) as soon as practicable after ascertaining the amount of the royalty referred to in sub - paragraph ( i), the State Minister shall give the producer notice in writing of that amount;
(iii) where the amount specified in the notice referred to in sub - paragraph ( ii) in respect of a financial year exceeds the sum of the amounts paid to the State by the producer under the provision of the agreement required by paragraph ( e) in respect of that year--the producer shall pay to the State the difference between the amount and the sum; and
(iv) where the amount specified in the notice referred to in sub - paragraph ( ii) in respect of a financial year is less than the sum of the amounts paid to the State by the producer under the provision of the agreement required by paragraph ( e) in respect of that year--the State shall pay the producer the difference between the amount and the sum or shall otherwise give the producer the benefit of that difference;
(g) that, if relevant petroleum is destroyed or lost and the producer receives an amount by way of insurance or indemnity in respect of the destruction or loss, the producer shall be taken to have sold the petroleum for that amount;
(h) that, where relevant petroleum is sold by the producer otherwise than in an arms length transaction, the producer shall be taken to have sold the petroleum for an amount equal to the value of the petroleum at the time of the sale;
(j) that market petroleum shall be taken to be sold otherwise than in an arms length transaction if--
(i) there is any consideration payable for or in respect of the petroleum other than its price;
(ii) the price is influenced by a commercial or other relationship between the buyer, or an associate of the buyer, and the seller, or an associate of the seller; or
(iii) the buyer, or an associate of the buyer, will, directly or indirectly, be reimbursed, be compensated, or otherwise receive a benefit for, or in respect of, the whole or any part of the price;
(k) that 2 persons shall be deemed to be associates of each other if, and only if--
(i) both being natural persons--
(A) they are connected by a blood relationship or by marriage or by adoption; or
(B) one of them is an officer or director of a body corporate controlled, directly or indirectly, by the other;
(ii) both being bodies corporate--
(A) both of them are controlled, directly or indirectly, by a third person (whether or not a body corporate);
(B) both of them together control, directly or indirectly, a third body corporate; or
(C) the same person (whether or not a body corporate) is in a position to cast, or control the casting of, 5% or more of the maximum number of votes that might be cast at a general meeting of each of them;
(iii) one of them, being a body corporate, is, directly or indirectly, controlled by the other (whether or not a body corporate);
(iv) one of them, being a natural person, is an employee, officer or director of the other (whether or not a body corporate);
(v) they are members of the same partnership; or
(vi) they are trustees or beneficiaries, or one of them is a trustee and the other is a beneficiary, of the same trust;
(m) that, if--
(i) the production of market petroleum from the production unit is ended; and
(ii) there are costs directly incurred in ending that production that are not included in eligible expenditure in respect of relevant petroleum disposed of in a financial year, not being costs incurred later than 36 months after the ending of that production,
the State will pay to the producer an amount equal to 40% of those costs; and
(n) subject to clause 2, expressions in the agreement that are used in this Act (including this Schedule) have the same meaning as in this Act.
2. A resource rent royalty agreement may substitute for an expression in this Act (including the Schedule) another expression that has the same meaning as the first - mentioned expression.
3. A resource rent royalty agreement may provide for a penalty by way of additional royalty under the agreement.
4. ( 1 ) In this Schedule:
"accumulated net receipts", in relation to the market petroleum produced from a production unit which is disposed of in a financial year, means the amount ascertained in accordance with the formula--
"A" + B (1 + C ),
" " 100
"where--"
"A" is the net receipts derived from the market petroleum;
"B" is--
"(a)" where the accumulated net receipts in relation to the market petroleum produced from that production unit which was disposed of in the immediately preceding financial year was not ascertained for the purposes of this Act--zero;
"(b)" where the accumulated net receipts in relation to market petroleum produced from that production unit which was disposed of in the immediately preceding financial year was nil or greater--zero; or
"(c)" where the accumulated net receipts in relation to the market petroleum produced from that production unit which was disposed of in the immediately preceding financial year was less than nil--those accumulated net receipts; and
"C" is the threshold rate for the financial year;
""eligible exceptional expenditure", in relation to market petroleum produced from a production unit which is disposed of in a financial year, means--"
"(a)" expenditure incurred in that financial year in respect of the exploration for, or the determination of the existence, location, extent, quality or occurrence of, petroleum the source of which forms, or would form, part of that production unit (including expenditure in respect of geological and geophysical surveys and exploration, development and appraisal drilling); or
"(b)" where that financial year is the first financial year to which the relevant resource rent royalty agreement that relates to that production unit applies--expenditure incurred in the immediately preceding financial year--
(i) in respect of exploration, development and appraisal drilling programs relating to the exploration for, or the determination of the existence, location, extent, quality or occurrence of, petroleum the source of which forms, or would form, part of that production unit; or
(ii) in relation to the equipment of production wells drilled in accordance with those programs;
""eligible expenditure", in relation to market petroleum produced from a production unit which is disposed of in a financial year, means" eligible normal expenditure and eligible exceptional expenditure relating to that petroleum;
""eligible normal expenditure", in relation to market petroleum produced from a production unit which is disposed of in a financial year, means expenditure incurred in the production of the petroleum (whether capital expenditure, expenditure on administration, operations, exploration, marketing, research, or rehabilitation of the environment or other expenditure) but does not include--"
(a) eligible exceptional expenditure;
(b) expenditure relating to loans or the acquisition of capital;
(c) expenditure relating to depreciation charges and taxes on income;
(d) expenditure by way of payments for entering a joint venture;
(e) expenditure by way of payment of a royalty known as an override royalty; or
(f) other expenditure not directly related to the production of the petroleum;
""financial year", in relation to a resource rent royalty agreement, means--"
(a) in the case of an agreement that relates to a production unit that includes at least one source of petroleum from which petroleum for commercial use was produced before 25 June 1985--a period agreed upon by the State Minister and the relevant producer; or
(b) in any other case--a period of 12 months commencing on 1 July;
""gross receipts", in relation to market petroleum produced from a production unit which is disposed of in a financial year, means the sum of--"
(a) the proceeds of the sale of that market petroleum which was sold; and
(b) the value of the market petroleum which was not, and is not to be, sold, other than--
(i) market petroleum flared or vented with the approval of the State Minister;
(ii) market petroleum used by the relevant producer for the purposes of active operations of the production unit; and
(iii) market petroleum which is otherwise lost, not being market petroleum to which the provision required by paragraph 1 (g) applies;
""long" - term bond rate", in relation to a financial year, means the average of the weighted average yield of the longest term bond series in each Commonwealth Treasury bond tender declared in that year;
""net receipts", in relation to market petroleum produced from a production unit which is disposed of in a financial year, means the difference between the gross receipts for that petroleum and the eligible expenditure relating to that petroleum;"
""State Minister", in relation to a resource rent royalty agreement, means the Minister of the Crown of the State who is responsible, or principally responsible, for the administration of matters relating to petroleum in the State;"
""threshold rate", in relation to a financial year, means the sum of--"
(a) the long - term bond rate for that year; and
(b) a rate not greater than 15%.
( 2 ) For the purposes of this Schedule and a resource rent royalty agreement, market petroleum shall be taken to be disposed of--
(a) when it is sold; or
(b) in a case where it is not sold--when it leaves the production source, a facility, or another place, in the production unit where it was produced otherwise than in the course of moving to another place in that unit.