What MPCP is and who received payments in 2017-18

The Marginal Abatement of Petroleum Crude Production (MPCP) was a payment scheme run by the Australian Taxation Office that provided cash to certain oil and gas producers during the 2017-18 financial year. If you received an MPCP payment between July 1, 2017, and June 30, 2018, you needed to report it on your tax return for that year.

MPCP payments were not universal — they went only to entities that met specific criteria around crude oil production volumes and timing. The scheme was temporary and operated only during that single financial year. Most recipients were larger petroleum producers, though some smaller operators also may have access to depending on their production levels.

Understanding how to report this payment correctly matters because the ATO treated MPCP income differently from ordinary business income on your tax return. Reporting it in the wrong place or omitting it entirely could trigger a compliance issue when the ATO matched your return against their records.

Key Takeaways

  • MPCP payments in 2017-18 were reported on your tax return as assessable income, not as a separate credit or offset.
  • The payment amount and your tax file number were recorded by the ATO, so omitting it from your return creates a mismatch the ATO will detect.
  • If you received an MPCP payment, you needed to include it in your assessable income for the 2017-18 financial year, which runs from July 1, 2017, to June 30, 2018.
  • The scheme operated only during 2017-18 and did not continue into later financial years, so you would not report MPCP income on returns for 2018-19 or beyond unless you received a late or amended payment.

Where to report MPCP payments on your tax return

MPCP payments appeared on your assessment notice or payment statement from the ATO during the 2017-18 financial year. You reported the full amount as part of your assessable income on your tax return for that year. The exact line or section depended on whether you were an individual, a company, or a trust, but in all cases the payment was treated as ordinary income subject to tax.

If you used tax return software or worked with a tax agent, the software or agent would have prompted you to enter this income. It did not reduce your tax bill — it increased your taxable income. The payment itself was not a tax offset or rebate; it was cash the government provided, and you owed tax on receiving it.

If you filed your own return and missed the MPCP payment, the ATO's records would show a discrepancy. When the ATO matched your return against its payment records, it would identify the missing income and could issue an amended assessment or contact you to correct the return.

Who was may have access to to receive MPCP payments

MPCP payments went to entities that produced crude oil in Australia and met production thresholds set by the government. The scheme was designed to support domestic petroleum producers during a specific period. Not every oil and gas company may have access to — the criteria included minimum production volumes and other conditions that varied depending on the type of operation.

If you received a payment, the ATO sent you a notice or statement showing the amount. This document was your record that you were may have access to to the payment and the amount you needed to report. If you are unsure whether you received an MPCP payment in 2017-18, you can contact the ATO directly with your tax file number to confirm.

What to do if you did not report MPCP income on your 2017-18 return

If you received an MPCP payment in 2017-18 but did not include it on your tax return, you should correct this as soon as you notice the omission. The ATO will eventually identify the discrepancy through its matching process, and correcting it yourself is simpler than waiting for the ATO to contact you.

You can lodge an amended return for the 2017-18 financial year through the ATO's online services or by contacting a tax agent. The amended return should include the MPCP income you originally omitted. You may owe additional tax on this income, plus interest calculated from the original due date of the return, but amending the return yourself shows good faith and may reduce any compliance action the ATO might otherwise take.

If the ATO contacts you about a missing MPCP payment, respond promptly with the amended return or explanation. Ignoring the contact will not resolve the issue and may result in the ATO issuing an amended assessment without your input.

MPCP payments and your other income sources

MPCP income was added to your other assessable income for the year — it did not replace or offset any other income you reported. If you were an employee, a business owner, or received investment income, all of that income plus the MPCP payment combined to form your total assessable income for 2017-18.

This matters for tax brackets and Medicare levy calculations. The MPCP payment pushed your total income higher, which could move you into a higher tax bracket or trigger Medicare levy liability if you were previously below the threshold. When you filed your return, the tax software or your agent would have calculated your tax liability on the combined total.

MPCP and the 2017-18 financial year only

The MPCP scheme operated only during the 2017-18 financial year (July 1, 2017, to June 30, 2018). If you received a payment during that period, you reported it on your 2017-18 tax return. The scheme did not continue into 2018-19 or later years, so you would not report MPCP income on any return filed after the 2017-18 year unless you received a late or amended payment from the ATO.

If you are filing a return for a year after 2017-18 and you received an MPCP payment, check the payment date carefully. Payments issued after June 30, 2018, may have been treated differently or may have been reported on a later year's return depending on when the ATO processed them. Your payment statement from the ATO will show the date the payment was made and which financial year it relates to.

Keeping records of your MPCP payment

Keep any notice, statement, or letter from the ATO that shows your MPCP payment amount. This document is your proof of the payment and the amount you reported on your tax return. If the ATO ever questions your return or you need to amend it, this record will support your position.

Store these documents for at least five years from the date you filed your 2017-18 return. The ATO can review returns from previous years, and having the original payment documentation makes it easier to resolve any questions that arise. If you used a tax agent, they may have kept copies as well, but it is your responsibility to maintain your own records.

Frequently Asked Questions

Do I need to report MPCP payments if I am a company or trust?

Yes. MPCP payments were assessable income regardless of the entity type. Companies reported the payment on their company tax return, and trusts reported it on their trust tax return. The treatment was the same — the payment was added to assessable income and subject to tax at the applicable rate.

What if I received an MPCP payment but no longer have the ATO's notice?

Contact the ATO with your tax file number and ask for a copy of your MPCP payment record for 2017-18. The ATO keeps records of all payments it issued and can provide you with a statement showing the amount and date. You can then use this to amend your return if needed.

Can I claim a deduction against my MPCP payment?

MPCP payments were treated as income, not as a credit or offset. You reported the full amount as assessable income. If you had business expenses related to crude oil production, you could claim those as deductions against your total business income, which would reduce your taxable income overall, but you could not claim a deduction specifically against the MPCP payment itself.

What happens if the ATO finds I did not report MPCP income?

The ATO will issue an amended assessment showing the additional income and the tax owing on it. You will also owe interest calculated from the original due date of your return. If you amend your return yourself before the ATO contacts you, you may avoid additional compliance action, but you will still owe the tax and interest on the unreported income.

Did MPCP payments affect my Medicare levy?

Yes, if the MPCP payment pushed your total income above the Medicare levy threshold for your circumstances, you would have owed Medicare levy on the additional income. The tax software or your tax agent would have calculated this when processing your return, but it is worth checking your assessment to confirm the levy was calculated correctly.