CAPITAL GAINS TAX IN THE PETROLEUM INDUSTRY

1986 ◽  
Vol 26 (1) ◽  
pp. 23
Author(s):  
S. Breckenridge
Keyword(s):  
Income Tax ◽  
Focal Point ◽  
Petroleum Industry ◽  
Capital Gains ◽  
Tax Rates ◽  
Capital Gains Tax ◽  
Resource Rent ◽  
The Government ◽  
Legal Concepts ◽  
The Cost

Eleven years after a previous abortive attempt, another Federal Labor Government has announced its intention to incorporate into the Australian fiscal scene a capital gains tax. The tax is to be levied at marginal and corporate income tax rates on 100 per cent of inflation adjusted gains realised on assets acquired on and after 20 September 1985.Whilst the Government expects its revenue yield to be low even at the end of five years of operation, the cost of protective administration and compliance to be incurred by taxpayers will be substantial.There are substantial areas of uncertainty in the capital gains tax proposals generally, and in particular as they relate to the petroleum industry. These issues, coupled with the prospect of significant legislative delay, will detract further from Australia's appeal as a focal point for essential exploration dollars.The capital gains tax proposals outlined to date deal, superficially, with basic and very tangible property. However, they do not come to grips with issues such as the potential duplication of this tax and resource rent tax, the need to protect the position of non-residents from double taxation, the basis for imposition of capital gains tax upon changes in licence and permit interest through direct or indirect transfers, to avoid bunching distortions, and to more fully provide for rollover relief.The capital gains tax proposals will exacerbate the substantial stress upon the Australian Taxation Office and, coupled with the forthcoming requirement of the Income Tax Assessment Act to accommodate the proposed resource rent tax, will only serve to highlight the fact that in reality the petroleum industry has not been a winner in this area of the tax reform process.The scope for unexpected capital gains tax exposures to arise is marked and will require a clear analysis of several long-established legal concepts to ensure that even reasonable results are obtained.

Tax issues impacting acquisitions in the Australian oil and gas industry

2011 ◽  
Vol 51 (2) ◽  
pp. 669
Author(s):  
Chad Dixon
Keyword(s):  
Income Tax ◽  
Oil And Gas ◽  
Investment Decision ◽  
Oil And Gas Industry ◽  
Capital Gains ◽  
Capital Gains Tax ◽  
Gas Industry ◽  
Resource Rent ◽  
Goods And Services ◽  
Petroleum Resource

Understanding the tax implications and structuring options of a transaction is critical when assessing and comparing new opportunities. When undertaking any transaction involving Australian oil and gas assets, the applicable taxation regime should be carefully explored and understood. From an Australian perspective, taxes such as corporate income tax, petroleum resource rent tax, capital gains tax, and goods and services tax have significant potential to influence the investment decision. This presentation will focus on the tax implications applicable to the acquisition and disposal of Australian oil and gas assets, providing valuable insights for both Australian companies and inbound investors.

scholarly journals Non-Residents and Capital Gains Tax in Australia

2019 ◽  
Vol 67 (1) ◽  
pp. 1-22
Author(s):  
Richard Krever ◽  
Kerrie Sadiq
Keyword(s):  
Income Tax ◽  
Housing Prices ◽  
Capital Gains ◽  
Capital Gains Tax ◽  
Real Property ◽  
Tax Base ◽  
The First World War ◽  
Primary Driver ◽  
The Government ◽  
Definition Of

The evolution of capital gains taxation in Australia parallels that in Canada in many respects. Federal income taxes were adopted in both countries during the First World War, and in both jurisdictions the courts interpreted the term "income," the subject of taxation, using United Kingdom judicial concepts that excluded capital gains from the tax base. In the last quarter of the 20th century, both countries amended their income tax laws to capture capital gains, and in both countries concessional rates apply. Initially, the Australian capital gains tax regime had rules that paralleled those in Canada in respect of the application of capital gains tax measures to non-residents, and the list of assets that might generate a capital gains tax liability for non-residents was similar in both countries. Australia changed course just over a decade ago with a decision to limit the income tax liability of non-residents in respect of capital gains to gains on land and land-rich companies alone, albeit with an extended definition of land to capture directly related interests such as exploration and mining rights. Consequently, until this decade, reform of Australia's regime imposing capital gains tax on non-residents focused on the concept of source as a primary driver, with the categories of taxable assets being gradually reduced. However, after more than a decade of unprecedented increases in housing prices in Australia, reform has moved away from addressing source to integrity matters. In Australia, as in Canada, there has been considerable investment in property, particularly residential property, by non-residents in recent years, and the government has sought ways to enhance the enforcement and integrity of the capital gains tax rules applying to non-residents disposing of Australian real property. Since 2013, Australia has proposed three separate measures to ensure integrity within this regime: removal of a concessional rate, introduction of a withholding tax, and removal of the principal residence exemption for non-residents. This article considers the history and development of Australia's capital gains tax regime as it applies to non-residents and examines the recent shift in focus from what is captured in the capital gains source rules to integrity provisions adopted to achieve both compliance and geopolitical objectives.

TAXATION ASPECTS OF SOLE RISK, OR, HOW TO MAKE THE TAX SYSTEM WORK FOR YOU

1986 ◽  
Vol 26 (1) ◽  
pp. 123
Author(s):  
P.A. Wilson
Keyword(s):  
Risk Premium ◽  
Income Tax ◽  
Petroleum Industry ◽  
Petroleum Exploration ◽  
Financial Cost ◽  
Resource Rent ◽  
Scarce Resources ◽  
Work Program ◽  
Work Programs ◽  
The Cost

Two of the problems currently facing the petroleum industry are the cost of funding petroleum and the relatively few major discoveries. Without major discoveries it is difficult, and will become more difficult, to attract new money into the petroleum exploration business.With these factors in mind it becomes more necessary for few companies to spend more money to fund major exploration programs and for the costs to be adequately shared by all participants in a venture.As currently drafted, the sole-risk provision in a Joint Operating Agreement acts as a rationer of scarce resources (i.e. money) for the finding of major new reservoirs. However, by restructuring the sole-risk premium clause it is possible to increase the financial cost (through income tax, resource rent tax, or resource rent royalty, as applicable) upon a party allowing another party to conduct a sole-risk project. This increased penalty might be a major factor in reducing the incidence of sole-risk programs without reducing the number of programs brought forward outside of permit work programs commitments.To achieve this end the sole-risk clause should be restructured to require the sole-risk party to own the project (information, wells, completion, deepening, etc) and then for it to create undivided interests on the sole-risk project for disposal to the non-sole-risk party. In this way, the premium would be received as consideration on sale of an interest in the project and not a disproportionate allocation of product.If this restructure were conducted then the interaction of income tax, and where applicable resource rent tax and resource rent royalty, might well induce all parties to agree to participate in non-work program operations leaving all work programs subject to sharing.

scholarly journals Firm Heterogeneity and the Long-run Effects of Dividend Tax Reform

2010 ◽  
Vol 2 (1) ◽  
pp. 131-168 ◽  
Author(s):  
François Gourio ◽  
Jianjun Miao
Keyword(s):  
Capital Accumulation ◽  
Firm Heterogeneity ◽  
Percent Level ◽  
Capital Gains ◽  
Tax Rates ◽  
Aggregate Productivity ◽  
Capital Gains Tax ◽  
Productivity Shocks ◽  
Long Run ◽  
Dividend Tax

To study the long-run effect of dividend taxation on aggregate capital accumulation, we build a dynamic general equilibrium model in which there is a continuum of firms subject to idiosyncratic productivity shocks. We find that a dividend tax cut raises aggregate productivity by reducing the frictions in the reallocation of capital across firms. Our baseline model simulations show that when both dividend and capital gains tax rates are cut from 25 and 20 percent, respectively, to the same 15 percent level permanently, the aggregate long-run capital stock increases by about 4 percent. (JEL D21, E22, E62, G32, G35, H25, H32)

11. Taxation of trusts and settlements

2018 ◽  
Author(s):  
Kathryn Wright ◽  
Clare Firth ◽  
Lucy Crompton ◽  
Helen Fox ◽  
Frances Seabridge ◽  
...  
Keyword(s):  
Income Tax ◽  
Capital Gains ◽  
Capital Gains Tax ◽  
Inheritance Tax

Settlements may be created by settlors in their lifetime, or by will, or they may arise under the intestacy rules. This chapter considers the tax implications of such settlements from the perspective of both the trustees and the beneficiaries. It considers each of the three main taxes separately: inheritance tax, capital gains tax, and income tax.

scholarly journals Optimal progressivity of personal income tax: a general equilibrium evaluation for Spain

SERIEs ◽  
2020 ◽  
Vol 11 (4) ◽  
pp. 407-455 ◽  
Author(s):  
Darío Serrano-Puente
Keyword(s):  
General Equilibrium ◽  
Income Tax ◽  
Optimal Level ◽  
Personal Income ◽  
Tax Rates ◽  
Personal Income Tax ◽  
Negative Effects ◽  
Spanish Economy ◽  
Current Scenario ◽  
The Cost

AbstractIs the Spanish economy positioned at its optimal progressivity level in personal income tax? This article quantifies the aggregate, distributional, and welfare consequences of moving toward such an optimal level. A heterogeneous households general equilibrium model featuring both life cycle and dynastic elements is calibrated to replicate some characteristics of the Spanish economy and used to evaluate potential reforms of the tax system. The findings suggest that increasing progressivity would be optimal, even though it would involve an efficiency loss. The optimal reform of the tax schedule would reduce wealth and income inequality at the cost of negative effects on capital, labor, and output. Finally, these theoretical results are evaluated using tax microdata and describe a current scenario where the income-top households typically face suboptimal effective average tax rates.

scholarly journals Dividends, Share Repurchases, and Tax Clienteles: Evidence from the 2003 Reductions in Shareholder Taxes

2011 ◽  
Vol 86 (3) ◽  
pp. 887-914 ◽  
Author(s):  
Jennifer L. Blouin ◽  
Jana S. Raedy ◽  
Douglas A. Shackelford
Keyword(s):  
Generalized Method Of Moments ◽  
Capital Gains ◽  
Share Repurchases ◽  
Individual Investors ◽  
Tax Rates ◽  
Capital Gains Tax ◽  
Firm Level ◽  
Shareholder Taxes ◽  
Tax Returns ◽  
Directors And Officers

ABSTRACT: This study jointly evaluates firm-level changes in investor composition and shareholder distributions following a 2003 reduction in the dividend and capital gains tax rates for individuals. We find that directors and officers, but not other individual investors, rebalanced their portfolios to maximize after-tax returns in light of the new tax rules. We also find that firms adjusted their distribution policy (specifically, dividends versus share repurchases) in a manner consistent with the altered tax incentives for individual investors. To our knowledge, this is the first study to employ simultaneous equations to estimate both shareholder and managerial responses to the 2003 rate reductions. We find that the generalized method of moments (GMM) estimates are substantially stronger than OLS estimates, consistent with our expectation that investor and manager responses are simultaneously determined. Failure to estimate systems of equations may account for some of the weak and conflicting results from prior studies of the 2003 rate reductions.

scholarly journals Long-Term Capital Gains Tax Strategies: Correlated Protective Put Strategy

2011 ◽  
Vol 2 (8) ◽  
Author(s):  
John R. Aulerich ◽  
James Molloy
Keyword(s):  
Stock Price ◽  
Capital Gains ◽  
Tax Rates ◽  
Capital Gains Tax ◽  
Tax Rate ◽  
Holding Period ◽  
Put Option ◽  
Highly Correlated ◽  
One Year

<p class="MsoNormal" style="text-align: justify; margin: 0in 0.5in 0pt;"><span style="font-family: Times New Roman; font-size: x-small;">A reduction in the long-term capital gains tax rate provides investors with new strategies to minimize taxes and protect investment gains.<span style="mso-spacerun: yes;">&nbsp; </span>One such opportunity exists when an investor decides to sell a profitable stock with a holding period of less than one-year, resulting in short-term ordinary taxes.<span style="mso-spacerun: yes;">&nbsp; </span>The investor would find it more beneficial to sell the stock after one-year lapses, resulting in lower long-term capital gain taxes, although the longer holding period exposes the investor to the uncertainty of stock price movement.<span style="mso-spacerun: yes;">&nbsp; </span>A strategy to extend the holding period without excess risk would be to use the protective put option strategy, sometimes referred to as &ldquo;investment insurance&rdquo;.<span style="mso-spacerun: yes;">&nbsp; </span>The strategy involves the purchase of a put option to protect against the possible decline in the stock price, to take advantage of the lower long-term capital gains tax rate, and to preserve the upside potential of the stock.<span style="mso-spacerun: yes;">&nbsp; </span>Pursuant to IRS Publication 550, the IRS does not allow the use of a protective put to extend the holding period on the same security considered for sale.<span style="mso-spacerun: yes;">&nbsp; </span>Since the IRS does not allow a direct protective put hedge, this study will explore an alternative strategy involving the purchase of a put on a highly correlated investment to extend the holding period to recognize lower capital gains tax rates.<span style="mso-spacerun: yes;">&nbsp; </span>The paper presents example situations when an investor benefits from utilizing the correlated protective put option strategy.</span></p>

scholarly journals MICRO, SMALL, AND MEDIUM ENTERPRISES TAXPAYER PERCEPTION ON THE DETERMINATION OF FINAL INCOME TAX POLICY ACCORDING TO GOVERNMENT REGULATION NUMBER 23 YEAR OF 2018

2019 ◽  
pp. 174-182
Author(s):  
Lina Said
Keyword(s):  
Income Tax ◽  
Government Regulation ◽  
Small And Medium Enterprises ◽  
Descriptive Analysis ◽  
Tax Rates ◽  
Income Tax Policy ◽  
The Government ◽  
Knitting Industry ◽  
Medium Enterprises

The Government has issued a new provision on Income Tax on Micro, Small, and Medium Enterprises (MSMEs), namely Government Regulation Number 23 the Year of 2018 about Income Tax Of Businesses Received or Obtained by Taxpayers Who Have Certain Gross Circulation, effective from 1st July 2018. The Government Regulation revokes Government Regulation Number 46 the year 2013 which has been effective for five years since its enactment on 1st July 2013. This new regulation is considered very important, especially for MSMEs because it regulates the reduction in final income tax rates for MSMEs with a turnover of maximum Rp. 4.8 billion per year, to 0,5% originally 1% (Government Regulation No.46/2013). The method used is descriptive analysis with a quantitative approach using questionnaires with respondents are MSMEs taxpayers in the knitting industry. The results of the research show that in general, knitting industry MSMEs do not know and understand about the implementation of Government Regulation Number 23 the Year of 2018. Taxpayer's perception of fairness is at 3.04, Certainty at 3.14, Convenience 3.20, and Economy/Efficiency 3.50.

Sign in / Sign up

Export Citation Format

Share Document