Section CT 3 — Income Tax Act 2007: Exploratory well used for commercial production

CT 3 Exploratory well used for commercial production When this section applies (1) This section applies when a petroleum miner uses an exploratory well for commercial production of petroleum, whether or not the well has been sealed and abandoned previously. Income (2) An amount equal to the amount of expenditure described in subsection (3) is treated as income of the petroleum miner. Exploratory well expenditure (3) The expenditure is exploratory well expenditure to which all the following apply: (a) it is directly attributable to drilling or acquiring the exploratory well; and (b) the petroleum miner or a holder of a previous interest in the well is or has been allowed a deduction for it as petroleum exploration expenditure; and (c) it is incurred in relation to the permit held currently by the petroleum miner, or a previous permit surrendered in exchange for the permit currently held under section 32(3) of the Crown Minerals Act 1991. Timing of income (4) The amount is allocated to the income year in which commercial production from the well starts. Part interest (5) If the petroleum miner has a part interest in the exploratory well when that well is first used for commercial production, the amount of expenditure treated as income under this section must bear the same proportion to the exploratory well expenditure specified in subsection (3) as that part interest bears to all interests in the well. Defined in this Act: amount , commercial production , deduction , exploratory well , exploratory well expenditure , income , income year , permit , petroleum , petroleum exploration expenditure , petroleum miner , seal and abandonment , Compare: 2004 No 35 s CT 3