Managing energy transition and environmental obligations is critically important in the energy and resources sector. This session used practical examples to explore the way in which the tax system deals with costs associated with managing environmental obligations and decarbonisation initiatives, including carbon capture and storage. Issues that will were covered included:
- In which cases are costs “business as usual” and immediately deductible (as a general deduction or capital allowance)
- Dealing with the treatment of early stage exploratory and feasibility expenditure
- In which cases should expenditure be included in the cost of an asset and what decline in value applies to the asset
- How the project pool provisions apply to these types of expenditures; and
- How the timing of these costs can impact value in an M&A context.