This proposal would replace the existing petroleum resource rent tax method of uplifting excess expenditure to future years with the following two treatments:

• All excess expenditure recorded by the implementation date would be depreciated over 10 year to offset petroleum resource rent tax profit. A minimum 10 per cent of existing expenditure would be used each year and be completely expired by year 10.
• For all expenditure, including general expenditure, incurred after the implementation date, the available deduction would be based on prime cost depreciation over 15 years so that 6.66 per cent of the expenditure would be available to be deducted each year. There would be no uplift factor applied to unused expenditure.

This proposal would also place a 10 per cent royalty of the wellhead value on projects subject to the petroleum resource rent tax, with these royalty payments creditable against petroleum resource rent tax liabilities on a one‐for‐one basis and treated as a deductible expense in calculating company tax liabilities. Any royalties paid that are not credited against petroleum resource rent tax liabilities in a year would be carried forward, to be credited against petroleum resource rent tax liabilities in a later year.

The proposal would have effect from 1 July 2019.