The Australian Taxation Office has knocked out about $40 billion in interest deductions by resources giants, boosting the tax take from oil and gas firms following a landmark legal case involving energy company Chevron.

Using litigation and legal settlement agreements negotiated with major corporate taxpayers, the ATO has limited past-year debt deductions and required firms to undertake significant restructuring of their arrangements, resulting in fewer debt-related claims and delivering about $12 billion in extra revenue to the budget so far.