He said the government would introduce effective life caps for these large assets. This has positive taxation and cash flow implications for companies investing in the capital-intensive areas of resource and energy development.

Macfarlane said the government has closely listened to the concerns of the resource sector and responded with significantly lower effective life caps than were initially recommended by the Australian Tax Office.

"This is consistent with the Government's objective of making sure Australia is an economically desirable place to invest money and do business. These lower caps will lure further overseas investment in the country's capital intensive resource industry and expand our future gas infrastructure."

"The changes have now been fine-tuned and I think they will be strongly welcomed by the resource and energy sectors," said Macfarlane.

The statutory "life-time" applies to several different categories of assets:

* For the specific asset classes, the Government has decided on an effective life cap of 20 years for gas transmission and major pipeline assets. This has been revised down from an initial expectation of 50 years.

* Oil and gas production assets will have a statutory cap of 15 years, except for oil and gas platform assets where the current 20 year life remains unchanged. This has been revised down from approximately 30 years.

* A 15 year cap will cover LNG production assets. This is half the safe harbour life of 30 years initially considered for major asset in this class.

"From Millmerran to Mandalong there are currently 35 mineral and energy projects in different stages of development around Australia. With these revised caps the government has responded to the real need to allow Australian resource and energy projects to effectively compete for international investment capital," said Mr Macfarlane.

It's expected that the Commissioner of Taxation's determination of effective lives will apply to assets bought under contract or due to start construction after 1 July 2002.