Manufacture of fuel blends
Fuel blending is the blending of fuel with other fuels or any other substances. It can include the blending of different quantities of like-fuel, for example diesel with diesel.
Blending of fuel goods is considered manufacture for excise purposes. They are covered by item 10(g) of the Schedule to the Excise Tariff Act 1921.
The following examples are considered excise manufacture, where excise duty will apply to the blend:
- Blending like with like, such as blending diesel with diesel (imported or local) when one or both the blend components are underbond.
- Blending a transport gaseous fuel, such as liquid petroleum gas (LPG), with a like non-transport gaseous fuel for transport use.
Businesses that manufacture fuel blends in Australia may be entitled to fuel tax credits for excisable fuels they use in their fuel blends.
Exempt fuel blends
Some blends are exempt from excise duty. This includes blends:
- of duty paid products, and all products are the same rate
- of duty paid goods with very small quantities of additives
- that prevent the final product being used in an internal combustion engine.
Excise obligations
If you manufacture an excisable fuel blend, you must:
- hold an excise manufacturer licence
- report the quantity of product being delivered into the Australian domestic market on an excise return
- lodge your excise return and pay excise duty when applicable
- have permission to move any underbond excisable goods.
If you're still unsure of the tax treatment of your fuel blend, you can:
- seek advice from a registered tax agent
- contact us
- apply for a private binding ruling.
Excise duty rates are indexed twice a year, in February and August. When calculating the duty payable, check the current rate to ensure your excise return is correct.