Mythbusting

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General tax

Is Australia getting its ‘fair share’ from multi-nationals like Chevron?

Chevron Australia pays a substantial amount of tax in Australia, including royalties, payroll tax, fringe benefits tax, excise and interest withholding tax. Since 2009, Chevron Australia paid almost $4.5 billion in federal and state taxes and royalties. Once our projects are up and running, that contribution will increase.

Why is Chevron accused of not paying tax?

Chevron does pay tax. Chevron Australia pays a range of taxes and charges including royalties, payroll tax, fringe benefits tax, excise and interest withholding tax. Since 2009, we’ve paid more than $4.5 billion in federal and state tax. During this same period Chevron Australia was spending tens of billions of dollars constructing two major LNG and domestic gas projects – Gorgon and Wheatstone - and did not make a single dollar of profit.

Activist group GetUp recently accused Australian corporations of getting a ‘free pass’ on tax. What is your response?

Activist scare campaigns continue to mislead rather than contribute to a constructive debate on tax reform in Australia.  Comments by GetUp’s National Director on Chevron’s tax affairs are flat out wrong.  Since 2009, Chevron Australia has paid about $4.5 billion in federal and state taxes in Australia.

The nation’s tax rules apply to us in the same way they do any other business. The Chevron-led Gorgon and Wheatstone Projects are largely under construction and have not yet produced a dollar of profit. Once these projects are up and running, our tax contribution will increase. Independent analysis from ACIL Allen has forecast Chevron will pay $2 to $3 billion a year in company tax to 2040.

We need to encourage the next wave of investment in oil and gas – not impede the nation-building projects which deliver the thousands of jobs and billions in tax revenue.  The Australian public deserves better than activist scare campaigns that fail to contribute to a constructive policy debate.


Economic contribution

What is Chevron’s economic contribution to Australia?

Chevron’s projects and activities in Australia have delivered significant economic and social benefits. Once Gorgon and Wheatstone are in full production, they will have an even greater economic impact. An independent economic analysis by ACIL Allen shows between 2009 to 2040, Chevron projects and other activities will deliver:

  • more than A$1 trillion to Australia’s gross domestic product;
  • 5,000 jobs a year in Australia; and
  • more than A$338 billion to Federal Government revenue.

Chevron Australia is proud of its achievements in developing the Gorgon and Wheatstone projects and the economic contribution these projects will make to the Australian economy over their operating lives.

At full capacity, Gorgon and Wheatstone have the capacity to produce 500TJ/d of domestic gas, around 50 per cent of WA’s current domgas supply.

What tax contribution does Chevron make?

Chevron Australia pays a range of taxes and charges including royalties, payroll tax, fringe benefits tax, excise and interest withholding tax. Since 2009, Chevron Australia has paid about $4.5 billion in federal and state tax, largely due to revenue generated by the company’s 1/6th share of the North West Shelf Project.

Why isn’t Chevron paying any income (company) tax?

While Chevron Australia did not pay income (company) tax in 2014/15, the company did pay a range of other taxes and royalties, totalling $574 million. The reason our 2014/15 taxable income was zero is because deductions for depreciation, our significant funding costs in Gorgon and Wheatstone, exploration costs, research and development costs and other operating costs were greater than our income which also declined along with global energy prices.


Petroleum Resource Rent Tax (PRRT)

How does the PRRT work?

The PRRT is a profit based tax. Once deductible costs are recovered, a tax rate of 40 per cent is applied.  This high tax rate reflects that it is a true profits based tax. PRRT is only one of a range of State and Commonwealth taxes and charges applied to oil and gas. Australia’s PRRT rules apply to Chevron in just the same way as they do any other resources business.

Chevron Australia expects to start paying Petroleum Recourses Rent Tax (PRRT) by 2029-2035 and pay $60-$140 billion over the life of our projects. 

Why aren’t we paying PRRT yet?

PRRT is a ‘super profits tax’ where tax is payable once a project’s revenues have exceeded costs plus a legislated rate of return. Low prices and high construction costs have contributed to Chevron not being liable for PRRT yet. This is the way the tax is designed to work and the rules apply to all resources companies in the same way.

Chevron Australia expects to start paying Petroleum Recourses Rent Tax (PRRT) by 2029-2035 and pay $60-$140 billion over the life of our projects.


Federal Court litigation

Chevron Australia received an adverse trial decision in a 2015 case against the Australian Taxation Office regarding debt funding arrangements. It was then unsuccessful in an appeal to the Full Federal Court. What happens next?

Chevron Australia has decided to seek special leave to appeal to the High Court of Australia in relation to its financing dispute with the Australian Taxation Office. 

As recognized by the Federal Court, Chevron Australia’s financing is a legitimate business arrangement, and the parties differ only in their assessments of the appropriate interest rate to apply.

Chevron Australia pays a substantial amount of tax in Australia, including royalties, payroll tax, fringe benefits tax, excise and interest withholding tax.  Since 2009, we’ve paid about $4.5 billion in federal and state taxes and royalties. 

We are one of Australia’s largest investors and employers. In addition to tax payments, Chevron will continue to deliver substantial economic benefits for decades to come.