Billions lost in NW Shelf taxes: report
WA and Federal taxpayers may have been short-changed billions of dollars by oil and gas producers exploiting the North West Shelf, an explosive report from the national Auditor-General reveals.
A review of the royalty system found companies claimed deductions they were probably not entitled to while authorities — State and Federal — had failed to review the tax system often enough over the years.
In an 18-month period, during which companies producing oil and gas from the North West Shelf had revenues of more than $19 billion, they claimed more than $5 billion in deductions.
Those deductions covered operating costs, depreciation, cost of capital, excises, processing tariffs and joint venture participant costs.
They slashed the amount of royalties that were paid, which, in the period, amounted to $1.9 billion, of which $1.3 billion flowed to the WA Government.
But the Auditor-General’s report said it appeared many of the deductions could not be made.
“The Royalty Schedule does not permit all the deductions currently being claimed,” it said.
“On this basis, the Australian National Audit Office has doubts about the eligibility of deductions claimed for the cost of debt and equity-funded capital, excise paid on crude oil and excise paid on condensate.”
The Federal Industry Department is responsible for raising and collecting the royalties from companies operating in the North West Shelf, relying in part on the WA Department of Mines and Petroleum.
Both departments maintained the royalty collection system was “robust”, with the WA agency arguing the Federal and State governments could be confident that royalties are being “accurately assessed and collected”.
WA Nationals leader Brendon Grylls said he had bigger concerns about the oil and gas industry, most notably its target of meeting a 15 per cent domestic gas reservation policy.