BUDGET STATEMENT 2014
35
SUSTAINING GROWTH, SECURING PROSPERITY
of 30 percent in the second year of
the expenditure and an allowance
of 20 percent in the third year. This
will be applicable to both plant and
machinery (tangible) and the drilling
of wells (intangible) expenses.
• For Workovers and Qualifying Side-
tracks
I propose to allow 100 percent of the
total costs of work-overs and qualifying
side-tracks in the year incurred. This
will have an impact of attracting
investment in already producing and
idle wells.
Gas Compression Facilities
• I propose that with respect to the
mid-stream natural gas sector, where
deliverability is a key concern, the wear
and tear allowance for compression
facilities
be
increased
from
25.0 percent to 33.3 percent under
the relevant legislation.
IV. In respect of the Promotion of
Alternatives fuels: Compressed Natural
Gas (CNG)
• I propose to replace the existing
incentives
of
tax
credit
of
25.0 percent and wear and tear
allowance for fleet operators with a
simple tax allowance of 100.0 percent
onthecostofconvertingmotorvehicles
of either individuals or companies to
useCNGup to amaximumexpenditure
of $40,000 per vehicle. This would
allowa benefit identical to the tax credit
incentive which would now extend to
both individuals and companies who
file annual income tax returns.
This measure will come into effect on
January 1, 2014.
incentive allows companies to claim
20 percent of the expenditure on
development activity for mature fields
and enhanced oil recovery projects as
a credit against their Supplemental
Petroleum Tax Liability. The credit is
only available for use in the financial
year in which the expense is incurred
and any unused tax credits cannot be
carried forward or backward for offset
from the tax liabilities of any other
financial year.
To ensure continuity of these activities
and increase new investments, I
propose that the unused tax credits be
allowed to be carried forward for one
year.
Capital Allowances
Capital allowance reliefs provide a
mechanism that de-risks and allows
for earlier recovery of investments. I
propose that capital allowances for the
upstream energy sector be simplified
and accelerated as follows:
• For Exploration
The existing initial and annual allow-
ances be replaced by a new allowance
of 100 percent of exploration costs to
be written off in the year the expendi-
ture is incurred.
This incentive will be applicable over
the period 2014 to 2017, and from2018,
an allowance of 50 percent in the first
year of the expenditure, an allowance
of 30 percent in the second year of
the expenditure and an allowance
of 20 percent in the third year will be
applicable.
• For Development
In place of the existing initial and
annual allowances, I propose to grant
an allowance of 50 percent in the first
year of the expenditure, an allowance
