Oil Taxation Act 1975 section 2

Assessable profits and allowable losses

Section 2 sets out how to calculate the assessable profit or allowable loss accruing to a participator from an oil field for each chargeable period under petroleum revenue tax.

• The assessable profit or allowable loss is the difference between the total of positive amounts and the total of negative amounts for the period — a net positive figure is an assessable profit and a net negative figure is an allowable loss
• Positive amounts comprise the gross profit from oil sales and appropriations, any licence credit, and amounts credited for allowable expenditure; negative amounts comprise the gross loss, any licence debit, and amounts debited for expenditure
• The gross profit or loss is calculated by comparing the aggregate value of oil disposed of, appropriated, or held in the period against one-half of the market value of oil held undisposed or undelivered at the end of the previous period
• Several categories of allowable expenditure — including field development costs (with a 35% uplift supplement), abortive exploration, exploration and appraisal, unrelievable field losses, and research expenditure — may be debited or credited against a participator's profits once formally claimed and allowed