Page 28 - BHP Economic Contribution Report 2020

Basis of Report preparation

The Report is prepared from data recorded in our financial systems, Fees
being the same data and financial systems used to prepare our Payments to governments in the form of fees typically levied on the
Financial Statements. In preparing the Report, we have followed initial or ongoing right to use a geographical area for exploration,
the draft guidance material produced by the Australian Accounting development and/or production. This includes licence fees, rental
Standards Board. fees, entry fees and other payments for licences and/or concessions.
The ‘Total payments as defined by the UK Regulations’ included Payments for infrastructure improvements
in pages 18 to 23 have been prepared in accordance with the Reports
on Payments to Governments Regulations 2014, as amended by the Payments to governments for the construction of public infrastructure,
Reports on Payments to Governments (Amendment) Regulations 2015 such as roads, bridges and port facilities.
and the UK Regulations implement the EU Accounting Directive Dividend payments
(Chapter 10, Directive 2013/34/EU) (the ‘UK Regulations’). Payments to governments with ownership interests in specific assets;
Taxes, royalties and other payments to governments are presented not payments to governments as holders of ordinary shares in BHP.
in this Report on a cash paid and cash received basis for the year There were no dividend payments to governments for the year ended
ended 30 June 2020. 30 June 2020.
For our controlled assets, amounts included in our total payments to
governments are 100 per cent of the assets’ payments to governments. Signature, discovery or production bonuses
For our non-operated and operated joint ventures, amounts included in Payments to governments upon signing an oil and gas lease,
our payments to governments are 100 per cent of the amounts paid by when discovering natural resources, and/or when production
BHP and, in the case of BHP Mitsubishi Alliance (BMA), 50 per cent of has commenced.
payments made by the operating entity for BMA in which BHP has a 50
per cent ownership. For our investments in joint ventures and associates Other payments
that are equity accounted by BHP, no amounts have been included in Payments to governments under other legislated tax rules, such as
our total payments to governments as BHP is not the operator and does payroll tax, fringe benefits tax, excise duties, property tax, land tax
not make payments on behalf of the operation. For information and black lung tax. These payments are not specifically required
purposes, 100 per cent of the payments made by our significant equity to be disclosed by the UK Regulations.
accounted investments have been shown on page 4 even though no Excluded amounts
amounts have been included in our total payments to governments. The following are not included in total payments to governments:
Taxes, royalties and other payments, both cash and in-kind (non-cash), Taxes collected
to governments, net of refunds, are collectively referred to in this Tax payments made to governments on behalf of our employees.
Report as ‘total payments to governments’ and include the following
payment categories: Indirect taxes
Tax payments made to or received from governments in the nature
Corporate income taxes of sales tax, value added tax and goods and services tax.
Payments to governments based on taxable profits under legislated Penalties and interest
income tax rules. This also includes payments made to revenue Payments to governments resulting from the imposition of penalties,
authorities in respect of disputed claims and withholding taxes. fees or interest.
For the purposes of allocating corporate income taxes to particular Other
countries in the Payments made by country and level of government Certain payments, whether made as a single payment or as a series
section of this Report, withholding taxes are allocated to the country to of related payments below US$100,000 (being a lower amount than
which the withholding taxes are remitted – for example, Chilean the £86,000 threshold set out in the UK Regulations).
withholding taxes paid to the Chilean Government are allocated to Chile.
Royalty-related income taxes Projects
Payments made on a project-by-project basis (refer to Payments made
Payments to governments in relation to profits from the extraction on a project-by-project basis section of this Report) present payments
of natural resources, including Petroleum Resource Rent Tax (PRRT) by entity when not specifically attributable to a project.
in Australia and Specific Tax on Mining Activities (STMA) in Chile. This
also includes payments to revenue authorities in respect of disputed Payments in relation to Corporate Head Office and the Commercial
claims. Royalty-related income taxes are presented as income tax in function have been included in the total payments to governments
section 5.1.1 Consolidated Income Statement in the Annual as defined by the UK Regulations. The payments are not attributable
Report 2020. to specific projects. ‘Corporate Head Office’ and ‘Commercial’
comprise functional support for the Group that in FY2020 consists
Taxes levied on production entirely of projects that undertake relevant activities as defined
Payments to governments in relation to crude excise, carbon tax and by the UK Regulations.
severance tax on the extraction of natural resources. Taxes levied on The Payments made on a project-by-project basis section presents
production are presented as expenses, not income tax, in section 5.1.1 corporate income tax amounts for each project/entity taking into
Consolidated Income Statement in the Annual Report 2020. account the effects of tax consolidation in Australia. These include
the following:
Royalties
Payments to governments in relation to revenue or production • losses from one entity can be offset against taxable income
generated under licence agreements. This also includes payments of another entity within the same tax consolidated group
to revenue authorities in respect of disputed claims. Royalties are • only the head entity of a tax consolidated group is liable to make
presented as expenses, not income tax, in section 5.1.1 Consolidated corporate income tax payments to the Australian Tax Office (ATO)
Income Statement in the Annual Report 2020. Royalty-related income • typically, corporate tax groups allocate the aggregate corporate
taxes are excluded from Royalties. income tax payments made by the head entity to the ATO among
Production entitlements entities within the Australian tax consolidated group
Payments to governments entitled to a share of production under Reporting currency
production sharing agreements. Production entitlements are most All payments to governments on pages 18 to 23 have been reported
often paid in-kind. In-kind payments are measured based on the market in US dollars. Payments denominated in currencies other than US
value of the commodity on the date of delivery to the government. dollars are translated for this Report at the exchange rate at the date
of the payment.

26 BHP Economic Contribution Report 2020