Welcome and introductions
Tony Poulakis welcomed members to the meeting and advised that minutes of the previous meeting, held on 1 September 2021, have been published on the ATO’s website.
One action item remains outstanding (01092021-1-1) that referred to an updated process relating to storage permissions. This has been a long running issue and related to the use of temporary storage on vessels. The ATO implemented a process where Petroleum Stakeholder Group (PSG) members contact their Excise Client Managers (ECMs), who liaise with Australian Border Force (ABF) counterparts to explore on a case-by-case basis whether the temporary use of a vessel to store product can be approved. Industry is keen to implement a more permanent arrangement where temporary storage on vessels, particularly international vessels, is permitted. Further work will be carried out to provide clients with a better understanding of the fundamental discretion / legislative provisions governing decisions by ABF in these cases. Helen Curran will contact Latha Reardon to discuss further.
Reflections of 2021–22 and compliance focus areas for 2022–23
Michael Hughes advised members that the fuel excise system is operating largely as intended. He noted that this is aided by having a concentrated industry, with the vast majority of excise paid by a small number of clients providing greater control and assurance. From an excise collections perspective, payments are returning to pre-COVID-19 levels. As noted previously, diesel remains largely unaffected due to the industries involved. Clearances of aviation fuels is increasing as travel restrictions are lifted.
The fuel excise tax gap has been updated and published on 31 October. The current gap for 2020–21 is 2.4%, or $475 million, up from the 2019–20 estimate; however, it should be noted that at such low levels, year-to-year volatility is considered a statistical variation rather than underlying changes in compliance. The gap of 2.4% is considered within the ATO’s tolerance levels and still represents one of the lowest tax gaps measured.
The temporary fuel excise rate reduction took place in March and ended 30 September. Michael expressed appreciation to industry in implementing the reduction with little notice. There were some issues with the supply/distribution chain in relation to reduction and pricing, however the ATO worked with industry to assist where possible. Clearances were monitored after the rate returned to the full amount in September. The ATO is working with several smaller fuel suppliers where a significant change in clearances prior to the return to the full rate was identified, to better understand the reason for the change.
The key component of the ATO’s compliance treatment strategy is built on the ECM program, with all PSG members having a dedicated ECM.
Michael noted that the level of confidence work (that is a lighter touch version of justified trust assessments) carried out by ECMs has been limited during COVID-19. That work will now recommence with the ATO contacting contact clients in early 2023 to discuss. The Excise Centre also contributes to the broader ATO Action Differentiated Framework to provide assurance of excise-related obligations for larger clients.
Given the work of the ECMs in assuring excise obligations are being met, there is not a significant compliance program planned for 2022–23. Nudge campaigns will be utilised to follow up outstanding lodgments, but the level of debt and late lodgments is very low in the fuel excise space.
Focus topic – Contemporary excise experience project
Nathan Lindemann provided an update on the Contemporary Excise Experience (CEE) project referring to the slide pack distributed in meeting papers. The project will ensure that there is a similar look and feel for online transactions for excise as for other taxes administered by the ATO moving from existing legacy systems.
- Phase 1 was deployed in September 2021 resulting in grants schemes being administered in the enterprise system. Meaning that Product Stewardship for Oil (PSO) program clients now can register and lodge claims online.
- Phase 2 will move accounting functions from legacy systems into the ATO’s enterprise-wide system. The timing of Phase 3, which relates to licenses, permissions and authorisations is yet to be determined.
- Phase 2 relates to excise duty returns, amendments and credit claims. This will move away from fillable PDF documents currently lodged via online services or email into a true online environment. Clients will be able to view lodgment and payment histories and review past excise returns. Lodgment reminders and nudge messaging will be automated for excise duty returns and clients will be able to request, and in some cases, enter into payment arrangements online. Although tariff items will need to be manually entered for the first return lodged online, the tariff items will be pre-filled/loaded into subsequent returns. Clients will just need to input the relevant volumes and submit. Further slides provided examples of the updated forms.
Members queried whether the ability to upload information from existing systems will be available. This is not an option in the current CEE project – volumes will need to be keyed in. Helen Curran noted a recent system upgrade by DISER where a template is provided it could be populated automatically.
Action item |
03112022-3-1 |
Due date |
1 December 2022 |
Responsibility |
Nathan Lindemann |
Action item details |
To explore further options for the fuel industry in relation to potential automated filling of online forms as part of Phase 2 of the CEE project. |
Tony Poulakis advised that communications would be issued to PSG members and clients as CEE progressed.
Focus topic – Deregulation new measures
Liz Jaspers reminded members of the announcement by the previous government in the 2022–23 Budget of a package of measures in relation to excise deregulation. If the current government agrees to proceed with these measures, the Departments of Treasury and Home Affairs will follow standard processes and consult with stakeholders and industry on the draft legislation. The standard consultation period for draft legislation is approximately 4 weeks. Invitations for submissions will appear in the Departments of Treasury and Home Affairs websites and will include any key dates and deadlines.
Industry members were referred to the announcement in Budget Paper No. 2 of the 2022–23 Budget and discussed the various aspects of those measures. Anthony Barnard referred members to the consultation paper released by the Deregulation Taskforce which provided further context to the measures considered by government at the time. He acknowledged the support of this group throughout the deregulation process through submissions and ideas for reform and measuring deregulation benefits. It was noted that the implementation date of 1 July 2023 will provide a short period of time for drafting of legislation and implementation.
Members advised that further details around a roadmap or guidance will be useful once a public announcement is made. Including whether consultation on legislative changes will be staggered or in a single request. Industry advised that notice will be required for system changes and consultation with customers. The public register proposal was discussed, with members noting that mandatory inclusion of entities will ensure that the register works effectively. Nathan Dickens offered for a working group to be established for further discussions on specific issues once a public announcement has been made. It could discuss industry specific issues such as determining commercial use for the removal of duty from bunker fuels, the average rate for Vapour Recovery Units and other fuel excise-specific issues as part of potential deregulation measures.
Industry updates – roundtable
- Nathan Dickens acknowledged the importance of the ECM program. He noted recent changes in managers following a long period of stability and queried ATO support for the function, as well as offering industry support by way of training or other capability building. Michael Hughes advised that there has been recent retirements or promotions in the ECM team and the Excise Centre are working to rebuild industry knowledge and experience within the team. He advised there are currently 4 ECMs managing 9 fuel excise clients who also have other industry roles relating to the PSO program. Tony Poulakis advised the Excise Centre are also undertaking a review of coverage across the client base to provide assurance and service across a second tier of clients, with client managers potentially providing one-to-one support for key clients and one-to-some support for others. A petroleum industry lead will likely be appointed, who will liaise with industry to ascertain if there are any specific areas of capability build required. Industry emphasised their support for this program, noting it is a strong risk management program for industry and the ATO.
- Industry noted that deferred/monthly payment of excise liabilities has not been part of the proposed deregulation measures and they are keen to consider other ways to alleviate the burden imposed by weekly settlement and payment.
- It was noted that the ATO is responsive assisting in ad hoc instances such as systems issues and industry queried if consideration could be given to arrangements being put in place for the Christmas shutdown period, either as a sector-wide or excise client-wide arrangement. Megan Kirkby noted that processes for excise returns involved a preparer, a reviewer and a second level reviewer requiring these people to attend work during the shutdown period. Industry queried if the ATO would consider flexibility to delay the submission of the excise return with payment made on the due date, based on an estimate.
- Anthony Barnard noted that the shutdown period for 2022–23 includes2 Mondays. Lodgment via periodic settlement permission for 26 December, Boxing Day public holiday will be on Wednesday 28 December. For 2 January 2023, New Year’s Day public holiday in lieu will be Tuesday 3 January. He noted that current legislation allows for the ATO to have discretion to defer payment only in certain circumstances such as a natural disaster and would need to be extended to all payers affected by those circumstances.
Action item |
02112022-5-1 |
Due date |
15 December 2022 |
Responsibility |
Nathan Dickens |
Action item details |
A meeting to be arranged with ATO to explore potential options to reduce the administrative burden of weekly lodgment and payment. |
- Nathan Dickens referred to emerging fuels and noted significant development of new fuel standards, for example B20 and new blends of biodiesel. He noted that a new standard for renewable diesel will be a priority for 2023, with sustainable aviation fuel also gaining interest commercially to reduce emissions. Low carbon alternatives are a focus for future fuels, with low diesel leading to a drop in emissions almost immediately. New standards for fuel will bring new producers to the market and industry considers it important to have standards in place for these producers. This will involve work by industry and government. The Australian Institute of Petroleum proposed providing an update for the ATO and ABF in 2023 as they are currently doing for other agencies.
- Nathan raised the issue of evolving modes of supply and storage of fuel. Regulations impacting this will be coming into effect in 2023, including the mandatory stock obligation. He noted that companies will be reconsidering supply and logistics operations, with possible implications being smaller boats entering Australia to ensure there is adequate supply to move around the country as required. It is expected that floating supplies off the coast will be an increasing feature of the fuels landscape and it is necessary to consider how to best accommodate that within the current architecture of ATO and ABF compliance. Helen Curran advised this relates to crude and intermediate products and the reduced number of domestic refineries means that stock cannot be easily moved to other refineries. She noted that industry had undertaken to keep refineries open to maintain fuel security, but this led to other issues. Nathan added that Australia is unique in the amount of sea border and entry points.
Action item |
03112022-5-2 |
Due date |
15 December 2022 |
Responsibility |
Anthony Barnard |
Action item details |
Anthony Barnard to liaise with Bill Barton regarding fuel storage arrangements used in other jurisdictions. |
Helen Curran noted that Australia does not have a domestic oil tanker fleet. Nathan advised that the government has recently established a Strategic Fleet Taskforce. He said there are significant changes taking place in the petroleum industry and more flexible arrangements are required as industry changes to meet needs for different fuel products. Tony Poulakis asked that AIP advise the ATO and ABF where issues relating to fuel storage are considered by the Taskforce.
Action item |
03112022-5-3 |
Due date |
15 December 2022 |
Responsibility |
Michael Hughes |
Action item details |
Michael to advise PSG members the aggregate number of clients over the $50 million threshold who will continue to lodge and pay weekly should the new measures be introduced. |
Meeting close
Tony Poulakis thanked members for their continued participation and contributions throughout the year in the PSG. Meeting concluded at 3.22pm.
Attendees
Organisation |
Attendees |
|---|---|
ATO |
Tony Poulakis (Chair), Private Wealth |
ATO |
Anthony Barnard, Private Wealth |
ATO |
Anthony O;Connell, Private Wealth |
ATO |
Brian Geovanovich, Private Wealth |
ATO |
David Maurovic, Private Wealth |
ATO |
Jack Stewart, Private Wealth |
ATO |
Mark Arnold, Private Wealth |
ATO |
Michael Hughes, Private Wealth |
ATO |
Nathan Lindemann, Private Wealth |
ATO |
Rowena Troth (Secretariat), Private Wealth |
ATO |
Stasi Polas, Private Wealth |
ATO |
William Reid, Private Wealth |
Ampol Petroleum Pty Ltd |
Jenny Park |
Ampol Petroleum Pty Ltd |
Megan Kirkby |
Australian Border Force |
Alex May |
Australian Border Force |
Latha Reardon |
Australian Institute of Petroleum |
Nathan Dickens |
BP Australia Pty Ltd |
Bill Barton |
Exxon Mobil |
Darren Koh |
Exxon Mobil |
Grace Abinoja |
Viva Energy |
Helen Curran |
Treasury |
Liz Jaspers |
Treasury |
Timothy Woltmann |
Treasury |
Tracy Richards |
Apologies
Organisation |
Members |
|---|---|
BP Australia Pty Ltd |
Waruna Peiris |
Viva Energy |
Troy Houston |