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Overseas Exploration and Prospecting

19.77. It has been submitted to the Committee that the availability of the deduction as allowable capital expenditure should be extended to expenditures made in exploration for petroleum overseas. Detailed arguments in support of this submission relate to Australia's future crude oil supply, the generation of overseas income with beneficial foreign exchange implications, the advantages of the export of Australian capital equipment and other products and support for Australian foreign-aid programmes. It is pointed out that the Governments of the United Kingdom, Canada, the United States, West Germany, France and Japan encourage the overseas activities of the private sectors of their economies by the provision of a range of financial incentives some of which are taxation concessions. Reference to the nature of these is made in the submission. It could not be denied that in these circumstances Australian companies engaged in overseas petroleum exploration would be placed at a considerable competitive disadvantage to the companies operating in this field from the major industrial companies but, as with the submission in relation to overseas mineral exploration (see paragraph 19.29), the Committee is of the opinion that the question whether a taxation concession of this kind should be granted upon these grounds does not depend upon matters within the purview of its terms of reference. Nevertheless, the Committee drews attention to the submission so that it may be considered in the appropriate quarters.

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