Excise guidelines for the fuel industry
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About this guide
This guide is intended to be a reference tool for the fuel industry to assist its members to meet their Excise obligations. It contains information about the excise system and how it applies to fuel and fuel products that are produced or manufactured in Australia. The guide will provide you with a broad outline of excise law and your compliance obligations - it does not cover every aspect of how excise law applies to every situation. Throughout this guide you will find important notes (look for the symbol)that will help you with key information you should note. You will also find 'more information' boxes (look for the symbol) that will show any further steps you may need to take or supplementary information you may need to refer to. The 'danger' notes (look for the symbol) give prominence to information that is critical to compliance. They suggest the highest level of urgency or facts you must comply with. If this guide does not fully cover your circumstances, please seek help from us or a professional adviser. You can contact us as follows:- phone 1300 137 290
- fax (03) 9285 1168, or
- write to us at
Australian Taxation Office
PO Box 3001
PENRITH NSW 2740
TERMS WE USE
When we say you, we mean you as a member of the fuel industry who is either registered or wishes to register for excise. Some technical terms used in this guide may be new to you - some are defined in the legislation, others are not. They are shown in bold when first used and are explained at the end of that chapter. The terms CEO, Collector, and Commissioner are all used in the legislation in reference to various officers. In most instances in this guide we have not used these specific terms and simply refer to 'us' or 'we'.OUR COMMITMENT
The information in this publication is current at May 2009. This publication is an expression of the Commissioner's opinion on the operation of fuel excise legislation. This publication is not legally or administratively binding on the Commissioner and is not a 'public ruling' for the purposes of Section 105-60 or Division 358 of Schedule 1 to the Taxation Administration Act 1953. The law does not provide for legally binding rulings on fuel excise legislation. Since we regularly revise our publications to take account of any changes to the law, you should make sure this edition is the latest. The easiest way to do this is by checking for a more recent version on our website at www.ato.gov.au01 INTRODUCTION
OUR COMMITMENT TO YOU The information in this publication is current at May 2009. This publication is an expression of the Commissioner's opinion on the operation of fuel excise legislation. This publication is not legally or administratively binding on the Commissioner and is not a 'public ruling' for the purposes of Section 105-60 or Division 358 of Schedule 1 to the Taxation Administration Act 1953. The law does not provide for legally binding rulings on fuel excise legislation. If you feel this publication does not fully cover your circumstances, please seek help from the Tax Office or a professional adviser. Since we regularly revise our publications to take account of any changes to the law, you should make sure this edition is the latest. The easiest way to do this is by checking for a more recent version on our website at www.ato.gov.au |
1.1 PURPOSE
This chapter deals with:- what excise is
- an overview of excise legislation relevant to fuel
- who administers Excise, and
- when you are involved in the excise system.
1.2 WHAT IS EXCISE?
The Commonwealth of Australia Constitution Act (the Constitution) provides that only the Commonwealth can impose duties of excise.[1] The Constitution also provides that laws imposing taxation (and excise is a tax) shall only deal with the imposition of tax. The Excise Tariff Act 1921 (Excise Tariff Act) imposes excise on relevant goods manufactured or produced in Australia and the Excise Act 1901 deals with administrative arrangements applying to the excise system. In Ha & Anor v. State Of New South Wales & Ors; Walter Hammond & Associates Pty Limited v. State Of New South Wales & Ors[2] (Ha), the High Court explained a duty of excise as follows: "... duties of excise are taxes on the production, manufacture, sale or distribution of goods, whether of foreign or domestic origin. Duties of excise are inland taxes in contradistinction from duties of customs which are taxes on the importation of goods."[3] Excise imposed by the Excise Tariff Act is imposed on goods dutiable under the Schedule to that Act and manufactured or produced in Australia. It can be seen that this clearly fits the definition of duty of excise as described by the High Court in the Ha case.1.3 OVERVIEW OF EXCISE LEGISLATION
The principal legislative framework for the excise system, relating to fuel, is contained in the:- Excise Tariff Act 1921 (Excise Tariff Act)
- Excise Act 1901 (Excise Act), and
- Excise Regulations 1925 (Excise Regulations).
For more information on Tariff Proposals see Section 1.3.1 - Excise Tariff Act. |
1.3.1 Excise Tariff Act
There are three key provisions in the Excise Tariff Act that operate to:- impose excise duty
- identify excisable goods and the applicable duty rates (the Schedule), and
- index the duty rate.
- alcoholic beverages (other than wine) and spirits
- cigarettes and other tobacco products, and
- fuel and oils.
Excise duties | |||
Item | Subitem | Description of goods | Rate of Duty |
10 | Goods as follows: ... (c) refined or semi-refined liquid products derived from petroleum, other than such products for use (other than in an internal combustion engine) in refining petroleum condensate or stabilised crude petroleum oil; ... (f) biodiesel ... | ||
10.5 | Gasoline (other than for use as fuel in aircraft) | $0.38143* per litre | |
10.6 | Gasoline for use as fuel in aircraft | $0.02854* per litre | |
10.10 | Diesel (other than biodiesel) | $0.38143* per litre | |
10.21 | Biodiesel | $0.38143* per litre |
The rates of duty for fuel products are currently fixed and are not indexed in accordance with increases in the CPI in the same way as alcohol and tobacco. |
Tariff proposals Tariff proposals are a means of changing the Excise Tariff (rates can be adjusted up or down; products can be added or removed) so that it is effective from the time it is proposed rather than after the enactment of an Excise Tariff Amendment Act. Most of the processes relate to Parliamentary procedures, however, there are specific provisions in the Excise Act that provide for the making of tariff proposals when Parliament is not sitting. Effectively changes to the Excise Tariff can be notified in the Parliament or, if the Parliament is not sitting, by notice in the Gazette. We then apply the proposal as if it is law. The tariff proposal is required to be validated by an Act within12 months giving retrospective effect to the date of the proposal. You cannot commence proceedings against us for any action taken to collect the amount set by the tariff proposal during the periods specified in section 114 of the Excise Act.[4] Effectively this means you need to pay in line with a tariff proposal. Any increases in rates or introduction of new products through a tariff proposal technically does not impose excise but we will protect the revenue by collecting amounts in line with the proposal. If an amending Act validating the changes outlined within the tariff proposal is not passed within the prescribed periods, then any additional amounts will be refunded to you. |
1.3.2 Excise Act
The Excise Act imposes controls in two main areas:- manufacture, storage and movement of excisable fuel products, and
- payment of duty for excisable fuel products.
For more information about the excise licensing regime, refer to Chapter 2 - Licensing: Applications. | |
For more information about movement permissions, refer to Chapter 5 - Movement permissions. |
For more information about payment of duty refer to Chapter 6 - Payment of duty. |
1.3.3 Excise Regulations
The Excise Regulations set out provisions in relation to excisable goods such as:- refunds and remissions, and
- drawbacks.
For more information about remissions, refunds and drawbacks refer to Chapter 7 - Remissions, refunds, drawbacks and exemptions. |
1.4 WHO ADMINISTERS EXCISE?
The Commissioner of Taxation has the general administration of the Excise Act and the Excise Tariff Act.[8] This means you have to deal with the Tax Office for Australian manufactured fuel products. As excise is only levied on products manufactured in Australia, imported fuel products are not subject to control by us. Customs duty, under the Customs Act 1901 (Customs Act) and Customs Tariff Act 1995 (Customs Tariff Act), is applied to imported fuel products. The Australian Customs Service is responsible for administration of the Customs Act and Customs Tariff Act. Who you need to deal with is summarised in the following table.Customs | Tax Office | |
Australian manufactured fuel products | No | Yes |
Imported fuel products not for further manufacture in Australia | Yes | No |
Imported fuel products for further manufacture in Australia | Yes | Yes |
1.5 WHEN AM I INVOLVED IN THE EXCISE SYSTEM?
You are involved in the excise system if you:- manufacture fuel products (excisable goods), or
- store or own fuel products on which duty has not been paid.
1.6 WHAT DO I DO IF I NEED MORE INFORMATION?
If you need more information on excise, as it relates to fuel, contact us:- phone 1300 137 292
- fax (03) 9285 1168, or
- write to us at
Australian Taxation Office
PO Box 3001
PENRITH NSW 2740
1.7 TERMS USED
Excisable fuel products Excisable goods are goods on which excise duty is imposed. Excise duty is imposed on goods that are listed in the Schedule to the Excise Tariff Act and manufactured or produced in Australia. As these guidelines deal with fuel products, we have used the term excisable fuel products. Excisable fuel products include:- petrol
- diesel
- crude petroleum oil
- heating oil
- kerosene
- fuel ethanol, and
- biodiesel.
1.8 LEGISLATION (quick reference guide)
In this chapter, we have referred to the following legislation:1.8.1 Excise Act 1901
Section 4 - Definitions Section 7 - General administration of Act Section 25 - Only licensed manufacturers to manufacture excisable goods Part IV - Manufacture, storage, producer and dealer licences Section 61A - Permission to remove goods that are subject to CEO's control Section 114 - Time for commencing action1.8.2 Excise Tariff Act 1921
Section 1A - General administration of Act Section 5 - Duties of excise Section 6A - Indexation of rates of duty The Schedule1.8.3 Commonwealth of Australia Constitution
Section 90 - Exclusive power over customs, excise, and bounties02 LICENSING: Applications
OUR COMMITMENT TO YOU The information in this publication is current at August 2012. This publication is an expression of the Commissioner's opinion on the operation of fuel excise legislation. This publication is not legally or administratively binding on the Commissioner and is not a 'public ruling' for the purposes of Division 358 of Schedule 1 to the Taxation Administration Act 1953. If you feel this publication does not fully cover your circumstances, please seek help from the Tax Office or a professional adviser. Since we regularly revise our publications to take account of any changes to the law, you should make sure this edition is the latest. The easiest way to do this is by checking for a more recent version on our website at www.ato.gov.au |
2.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO LICENCES? |
2.1 PURPOSE
This chapter deals with:- why there is a licensing regime
- what a licence is
- different licence types
- what records need to be kept
- responsibilities of a licence holder
- how long a licence is valid for
- whether licences are transferable
- disclosure of your licensing information
- how to register for excise
- how to apply for a licence
- how to change your licence details, and
- penalties that can apply to offences in relation to licences.
2.2 INTRODUCTION
2.2.1 WHY IS THERE A LICENSING REGIME?
The excise duty attached to excisable fuel products forms a significant component of the overall value of the goods. A licensing regime reduces the risk that the correct amount of duty will not be paid.2.2.2 WHAT IS A LICENCE?
A licence is an approval or authorisation to enable you to undertake activities as specified in the licence. If you undertake these activities without a licence or contravene your licence you are committing an offence and may be prosecuted. A licence is issued to a specific entity and specifies the site or sites[8A] where the activities may be undertaken. This may require you to have more than one licence. Licences can be issued to:- individuals
- partnerships and companies in their own right, and
- individuals and companies in their capacity as trustees.
A licence is not transferable. |
2.3 POLICY AND PRACTICE
2.3.1 DIFFERENT LICENCE TYPES
There are two licence types:- Manufacturer, and
- Storage.
Manufacturer licence
To manufacture excisable goods, the Excise Act requires you to be a licensed manufacturer[9] and that the goods be manufactured at licensed premises in accordance with the conditions specified on your manufacturer licence.[10] The term 'manufacture' is defined in section 4 of the Excise Act and includes all processes (that is, operations or actions) used in the manufacture of excisable goods. The definition in the Excise Act is an inclusive one, that is, it includes some processes that might otherwise not generally be considered as manufacture. However, the definition itself refers to the processes that are used in the manufacture of excisable goods. It is, therefore, relevant to examine the ordinary meaning of the word and determine its appropriateness for the purposes of the Excise Act. The courts have extensively examined the meaning of 'manufacture' in the context of legislation other than the Excise Act. Whilst it is not possible to directly adopt judicial interpretation of the word as it appears in other legislation, these cases do provide guidance. In summary, the courts have given the word 'manufacture' the meaning of either producing a thing which is different from its inputs, or bringing a new article into existence by skill or knowledge.[11] The courts considered processes that involved the application of knowledge, the application of skill, experience, services or labour which results in the conversion of materials into a saleable commodity may fall within the definition of 'manufacture'. The commodity must be different from the inputs which went into making it. In an excise context, the conversion may result in a change in physical and/or chemical properties of goods, for example, in colour, shape, density, viscosity, distillation temperature, composition, texture, aroma or taste.For more information on the Commissioner's view on manufacture for the purposes of the Excise Act refer to ER 2012/D1: Excise the meaning of the expression 'manufactured or produced' for the purposes of the Excise Acts. |
Exemptions from excise duty
Liquefied Petroleum Gas (LPG) and Liquefied Natural Gas (LNG) are exempt from excise duty when the fuel is used at the premises specified in a manufacturer licence in the process of manufacturing:- petroleum condensate or stabilised crude petroleum oil; or
- liquefied petroleum gas, liquefied natural gas or other hydrocarbons.
- compressed other than in the course of carrying on an enterprise or
- compressed at residential premises in equipment that is not capable of compressing more than 10 kilograms per hour or an amount per hour specified in the regulations, and provided the CNG is not sold or otherwise supplied in the course of carrying on an enterprise.
Petroleum condensate or stabilised crude petroleum oil; Topped crude petroleum oil; Refined or semi-refined liquid petroleum products derived from petroleum; Liquid hydrocarbon products derived through recycling manufacturing or any other process; Denatured ethanol for use as fuel in an internal combustion engine; Biodiesel; or LPG, LNG or CNG.However certain blending of those products is excluded from being manufacture[13]. This is where:
- the blending is of goods that have all had duty (customs or excise) paid at the same rate[14]
- the product is covered by a determination made under subsection 95-5(1)[15] of the Fuel Tax Act 2006[16]
- the product is covered by a determination under 77H(4) of the Excise Act 1901[17]
- blends of one type of aviation fuel where excise or customs duty has been paid on all fuel components of the blend albeit at different rates
- blends of one type of gaseous fuel where excise or customs duty has been paid on all fuel components of the blend at different rates and no remission has applied to any of the fuel
- blends of LPG or LNG where a full or partial remission of excise or customs duty has been applied to any components of the fuel blend because it is intended for non-transport use only (that is, not for use in a motor vehicle or vessel).[17A]
For more information on fuel blending refer to Chapter 12 - Fuel Blending. |
- crude oil and condensate production
- petroleum refining
- certain blending[17B]
- recycling[17C]
- biodiesel manufacture
- fuel ethanol manufacture
- production of LPG, LNG or CNG
- oil refining
- recycling
- biodiesel manufacture, etc.
Example 2A: Michaels Biofuels imports 10,000 litres of biodiesel which it intends to blend with diesel obtained underbond from a local refiner to produce a B20 blend to be sold into the Australian marketplace. Michaels Biofuels has a customs warehouse licence for the facility where the biodiesel will be stored. Michaels Biofuels also has an excise manufacturer licence for the same facility. The biodiesel is entered with the Customs for warehousing at the time it is imported. Michaels Biofuels blends the 10,000 litres of biodiesel with 40,000 litres of locally manufactured diesel and reports the 10,000 litres of biodiesel used in the blend to Customs. Michaels Biofuels delivers the 50,000 litres of B20 blend into the Australian domestic market in accordance with their periodic settlement permission and pays the excise duty of 50,000 x $0.38143 = $19,071.50. |
Storage licence
If you have a manufacturer licence and wish to store your excisable fuel products underbond at a place that is not specified in your licence you will require a separate storage licence for that place. If you are in the business of wholesaling and distribution you may wish to store underbond excisable fuel products (whether owned by you or someone else). In either case you would require a storage licence. Even if you are not the owner of the excisable fuel products, you are still responsible for the security of the goods and may be liable to pay an amount equivalent to the duty if the excisable goods are not kept safely or are not satisfactorily accounted for. A storage licence will specify the type of excisable fuel products and the location. It will also specify the activities, if any, you can undertake in relation to those goods, and whose excisable goods you can store,[21] for example:- goods you own
- goods owned by certain people
- storage of underbond product, and
- packaging (in bottles, tins, drums).
If you hold a valid manufacturer licence, you do not need a separate storage licence to store goods that you manufacture at those premises. The storage of your manufactured goods, whilst not manufacture in itself, is a normal part of the chain of events in manufacturing goods. It does not, however, include storing excisable goods manufactured by someone else. To store goods manufactured by someone else you will need a storage licence. |
2.3.2 WHAT ARE MY RESPONSIBILITIES AS A LICENCE HOLDER?
You are responsible for the secure storage of all excisable fuel products held on your premises or under your control and must keep or store excisable fuel products only at premises that are specified in your licence.[22] You may be responsible for paying an amount equal to the excise duty that would have been payable on any stolen, missing or unaccounted for excisable fuel products.[23] Where, after we take stock of excisable fuel products manufactured, and the materials you use in the manufacturing process, it appears to us that not all the duty that should have been paid has been paid, you must pay the difference between the amount paid and the amount that should have been paid.[24]If you wish to destroy any excisable fuel products you must first obtain permission from us to do so. |
For more information about obtaining permission to move excisable fuel products refer to Chapter 5 - Movement permissions. |
- ensure excisable fuel products are only delivered into the Australian domestic market with appropriate authority, such as in accordance with a periodic settlement permission or Delivery authority[27]
- pay the correct amount of excise duty[28]
- provide all reasonable facilities to enable us to exercise our powers under the Excise Act,[29]and
- provide sufficient lights, correct weights and scales, and all labour necessary for
- weighing material received into your factory
- weighing all excisable goods manufactured in your factory, and
- taking stock of all material and excisable goods contained in your factory.[30]
- ensure excisable fuel products are only delivered into the Australian domestic market with appropriate authority, such as in accordance with a periodic settlement permission or Delivery authority,[31]and
- pay the correct amount of excise duty[32]if you are the owner or manufacturer.
For more information about duty liability and methods of payment refer to Chapter 6 - Payment of duty. |
2.3.3 WHAT ELSE CAN WE DO?
Access We have the right to enter your licensed premises at any time and can examine and take account of all the goods at the premises.[33] Note: we will usually only seek to enter your premises during normal business hours. Stop vehicles We can stop any vehicle leaving your licensed premises and check that there is proper documentation for excisable fuel products leaving the premises. We can question the driver about any goods in the vehicle. We can direct that the vehicle be unloaded and goods taken to particular parts of the premises for further examination. We must not detain a vehicle for longer than is necessary to do the checking.[34] Search vehicles We can stop and search any vehicle (not just vehicles leaving a licensed premises) without a warrant if we have reasonable grounds for believing that the vehicle contains excisable fuel products and that the vehicle has been used, is being used or will be used in the commission of an offence under the Excise Act (and certain offences in the Crimes Act 1914[35] and Criminal Code[36] relating to accessory after the fact, attempt to commit an offence, aid and abet someone to commit an offence and conspiracy to commit an offence).[37] Examine goods We can open packages and examine, weigh, mark and seal any excisable fuel products that are subject to excise control and, if you are a manufacturer, lock up, seal, mark or fasten any plant in or on your factory.[38] We can also:- supervise the manufacture of excisable fuel products,[39] and
- take samples of materials, partly manufactured excisable fuel products and excisable fuel products subject to excise control, and fuel products that we have reasonable grounds for suspecting are excisable fuel products on which duty has not been paid.[40]
2.3.4 WHAT RECORDS DO I NEED TO KEEP?
Unlike other taxation laws the Excise Act does not have a general record keeping provision. The Excise Act does provide that a licence holder shall:- keep such records and furnish such returns as directed
- keep these records for the period directed, and
- on demand, produce those records to us.[41]
2.3.5 HOW LONG IS MY LICENCE VALID FOR?
Your licence will state its expiry date. When first issued, the licence is valid until the next 30 September two years after the anniversary of the day it is granted.[42]Example 2B: If we grant a licence on 15 September 2007, it will expire on 30 September 2009. If we grant a licence on 15 October 2007, it will expire on 30 September 2010. |
2.3.6 IS MY LICENCE TRANSFERABLE?
Generally you cannot transfer your licence to another individual, business entity or premises. The proposed new licence holder must apply for a new licence. You must also request cancellation of your current licence if you are no longer carrying out an excise activity. It is important that you advise us of any change in advance of it taking effect. The exception to the above rule arises when a licence holder dies. If this is the case, the licence is taken to be transferred to the person's legal personal representative. This allows for the finalisation of the affairs and, unless cancelled earlier, the licence is taken to be automatically cancelled 3 months after the licence holder dies.[43]For more information about cancelling licences refer to Chapter 4 - Licensing: Suspension & cancellation. |
2.3.7 CAN MY LICENSING INFORMATION BE DISCLOSED?
As well as the protection provided by the Privacy Act, the tax laws have secrecy provisions about using and disclosing taxpayer information. We can only look at, record, discuss or disclose information about you when it is a necessary part of our work, or where the law specifies that we may. Section 355-50 Taxation Administration Act 1953 allows us to record or disclose information about you in the performance of our duties. We also may disclose information where the disclosure is for the purpose of enabling the person to understand or comply with their obligations under the Excise laws.Example 2C Raul is licensed under the Excise Act to manufacture spirits. Tim has an approval issued under the Excise Act to use spirits for fortifying Australian wine. Tim wants to buy 1,000 litres of spirit from Raul. Raul contacts us to check that Tim's approval allows for 1,000 litres of spirit and that it is still current. We are permitted to divulge details of Tim's approval to Raul to allow Raul to fulfil his obligations under the Excise Act. |
Example 2D You need to find additional storage space for your finished fuel products and, therefore, need to check that the entity who offers to warehouse your products has a licence to store excisable fuel products. |
For information about your review rights refer to Chapter 8 - Reviews and objections. |
2.4 PROCEDURES
2.4.1 HOW DO I REGISTER FOR EXCISE?
You must register for excise before you can be issued with a licence to store or manufacture excisable fuel products. While it is not compulsory to provide an ABN or TFN for registration, it will help us to process your application. If you need an ABN, phone 1300 657 162 for a registration pack. You can send your completed ABN registration form with your completed excise registration application.To register for excise, complete an Application for excise registration (NAT 7103). |
2.4.2 HOW DO I APPLY FOR A LICENCE?
If you would like to apply for a licence, you should:- contact us, and
- lodge an application form together with all the required supporting documents.
- discuss your particular circumstances with you
- give you advice about the appropriate licence or licences
- explain how to apply
- explain your ongoing obligations as a licence holder, and
- provide you with a licence application form.
There is no charge for an excise licence. |
How do I lodge an application?
You need to complete the relevant form to apply for a manufacturer or storage licence.[44] Before lodging your application form, make sure you have included the required supporting documents. Your application form contains information to help you work out which supporting documents you must provide. You may also need to complete other excise forms, depending upon your proposed activities. Supporting documents include:- an accurate plan of the premises that clearly indicates the area for manufacture or storage
- a Consent to obtain information - individual (NAT 7112) form, or
- a Consent to obtain information - company (NAT 7106) form
- a Consent to criminal history record check (NAT 16358), and
- an application for permission to move underbond goods.
For more information about movement permissions refer to Chapter 5 - Movement permissions. | |
You should contact our Licensing staff on 1300 137 292 for advice about the forms and supporting documents that you will need to lodge. |
- fax them to us on (03) 9285 1168, or
- post them to
Excise Licensing Group
Australian Taxation Office
PO Box 3001
PENRITH NSW 2740
You must not manufacture or store excisable goods before your licence has been granted. | |
We will ordinarily respond to written information requests within 28 days. If we cannot respond within 28 days, we will contact you within 14 days to obtain more information or negotiate an extended response date. |
2.4.3 HOW DO I CHANGE MY LICENCE DETAILS?
We can amend your licence for changes that do not involve a change of entity or physical location. This includes a change of:- business name (that is your trading name)
- postal address, or
- street name or property address made by a relevant authority.
2.4.4 WHAT DO I DO IF I NEED MORE INFORMATION?
If you need more information on licensing matters contact us as follows:- phone 1300 137 292
- fax (03) 9285 1168, or
- write to us at
Australian Taxation Office
PO Box 3001
PENRITH NSW 2740
2.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO LICENCES?
The following are the penalties that may apply after conviction for an offence. Manufacture If you manufacture excisable fuel products without a manufacturer licence, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products.[47][47A] If you manufacture excisable fuel products contrary to the Excise Act or any conditions specified in your licence, the penalty is a maximum of two years in prison or 500 penalty units.[48] If you manufacture excisable fuel products at premises that are not specified in your licence, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products.[49] Keep or store If you possess or have custody or control of excisable fuel products without permission, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products.[50] False or misleading statements If you make a false or misleading statement, or an omission from a statement in respect of duty payable on particular goods, to us, a penalty not exceeding the sum of 50 penalty units and twice the amount of duty payable on those goods.[51] Records If you do not keep, retain and produce records in accordance with a direction under section 50 of the Excise Act, the penalty is a maximum of 30 penalty units. Directions If you do not comply with a direction in regard to what parts of the factory can be used for various matters, the penalty is a maximum of 10 penalty units.[52] Facilities etc. If you do not provide all reasonable facilities for enabling us to exercise our powers under the Excise Act, the penalty is a maximum of 10 penalty units.[53] If you do not provide sufficient lights, correct weights and scales, and all labour necessary for weighing material received into, and all excisable fuel products manufactured in, your factory and for taking stock of all material and excisable fuel products contained in your factory, the maximum penalty is 10 penalty units.[54] Marks and seals If we mark or seal excisable fuel products or fasten, lock or seal any plant in your factory and you alter, open, break or erase the mark, seal, fastening or lock, the maximum penalty is 50 penalty units.[55]2.6 TERMS USED
Excisable fuel products Excisable goods are goods on which excise duty is imposed. Excise duty is imposed on goods that are manufactured or produced in Australia and listed in the Schedule to the Excise Tariff Act. As these guidelines deal with fuel products, we have used the term excisable fuel products. Excisable fuel products include:- petrol
- diesel
- renewable diesel
- crude petroleum oil
- condensate
- heating oil
- kerosene
- fuel ethanol
- biodiesel
- compressed natural gas (CNG)
- liquefied natural gas (LNG), and
- liquefied petroleum gas (CNG).
2.7 LEGISLATION (quick reference guide)
In this chapter we have referred to the following legislation:2.7.1 Excise Act 1901
Section 4 - Definitions Section 6A - How this Act applies to partnerships Section 24 - Excisable goods and goods liable to duties of Customs may be used in manufacturing excisable goods Part III Division 1 - Manufacturers Section 25 - Only licensed manufacturers to manufacture excisable goods Section 26 - Licensed manufacturers to manufacture in accordance with Act and licence Section 27 - Licensed manufacturers to manufacture only at licensed premises Section 39 - Applications for licences Section 39E - Duration of licences Section 39O - Death of licence holder Section 46 - Supervision by officers Section 49 - Facilities to officers Section 50 - Record keeping Section 51 - Collector may give directions Section 52 - Weights and scales Section 53 - Responsibility of manufacturers Section 54 - Liability to pay duty Section 58 - Entry for home consumption etc. Section 60 - Persons to keep excisable goods safely etc. Section 61A - Permission to remove goods that are subject to CEO's control Section 61C - Permission to deliver certain goods for home consumption without entry Section 62 - Deficiency in duty Section 77G - Fuel blending is to be treated as manufacture Section 77H - Blending exemptions Section 77HA - Compresses natural gas that is exempt from excise duty Section 77HB - Liquefied petroleum gas and liquefied natural gas that is exempt from excise duty Section 86 - Officers to have access to factories and approved places Section 87 - Power to stop conveyances about to leave an excise place Section 87AA - Searches of conveyances without warrant Section 91 - Examine all goods Section 92 - Seals etc. not to be broken Section 106 - Samples Section 117 - Unlawful possession of excisable goods Section 120 - Offences Section 159 - Protection of confidentiality of information2.7.2 Excise Tariff Act 1921
The Schedule2.7.3 Customs Act 1901
Section 105B - Extinguishment of duty on excise-equivalent goods2.7.4 Crimes Act 1914
Section 4AA - Penalty units Section 6 - Accessory after the fact2.7.5 Criminal Code Act 1995
11.1 - Attempt 11.2 - Complicity and common purpose 11.5 - Conspiracy2.7.6 Taxation Administration Act 1953
Section 355-50 - Exception - disclosure in performing duties03 LICENSING: Assessing applications
OUR COMMITMENT TO YOU The information in this publication is current at May 2009. This publication is an expression of the Commissioner's opinion on the operation of fuel excise legislation. This publication is not legally or administratively binding on the Commissioner and is not a 'public ruling' for the purposes of Section 105-60 or Division 358 of Schedule 1 to the Taxation Administration Act 1953. The law does not provide for legally binding rulings on fuel excise legislation. If you feel this publication does not fully cover your circumstances, please seek help from the Tax Office or a professional adviser. Since we regularly revise our publications to take account of any changes to the law, you should make sure this edition is the latest. The easiest way to do this is by checking for a more recent version on our website at www.ato.gov.au |
3.5 WHAT PENALTIES CAN APPLY FOR OFFENCES IN RELATION TO MAKING AN APPLICATION? |
3.1 PURPOSE
This chapter deals with:- licensing criteria
- licence conditions
- securities
- assessing your application to renew your licence
- what happens if your licence is not granted
- what will happen if your licence is granted
- how to renew your licence, and
- penalties that can apply to offences in relation to making an application.
3.2 INTRODUCTION
The Excise Act provides us with the discretion whether to grant or refuse a licence. We base the decision on the information you supply. However subsection 39A(2) provides that if we consider certain criteria exist they can be the basis for refusal. In summary those criteria are:- whether you or an associate are not 'fit and proper'
- whether you do not have, or have available to you, the skills and experience required to carry out the activity that would be authorised by the licence
- the physical security of the premises is not adequate
- the plant and equipment to be used at the premises is not suitable
- you will not have a market for the goods
- you would not be able to keep proper books of account for audit purposes
- the grant of a storage licence would delay liability for duty, or
- it is necessary to refuse to grant the licence to protect the revenue.
- you are not 'fit and proper'
- existence of a market, and
- protection of the revenue.
3.3 POLICY AND PRACTICE
3.3.1 LICENSING CRITERIA
(1) 'Fit And Proper' Person Or Company[56]
The nature of the entity applying for the licence will affect who is assessed as being fit and proper:- if an individual, the individual is assessed
- if a partnership, each partner is assessed, and
- if a company, the company is assessed.
- another person who would participate in the management or control of the premises that is the subject of the licence application
- if the applicant is a company, then any director, officer, or shareholder of the company that would participate in the management or control of the company, and
- certain associates of the applicant (associates can be people or companies).
What does fit and proper mean?
The term 'fit and proper' is not defined in the Excise Act or Excise Regulations. Fit and proper is dependant on the purpose of the legislation and the proposed activities of the person concerned. In general, qualities of diligence, honesty and the likelihood of observance of the law are pivotal characteristics to be taken into account in considering fitness and propriety. In an Excise context we are assessing the suitability of the person applying for a licence to have access and control over excisable fuel products. The Excise Act provides a definitive list of factors that we will take into account in determining whether a person or company is fit and proper. These factors generally relate to:- any prosecution history
- solvency
- the honesty of information provided by the applicant
- compliance with tax obligations, and
- licensing history.
- whether, within a year of lodging the application, the person or company has been charged with:
- an offence under the excise legislation, or
- an offence under Commonwealth, State or Territory law punishable by imprisonment for one year or longer (for an individual), or by a fine of 50 penalty units or more
- whether, within 10 years of lodging the application, the person or company has been convicted of:
- an offence under the excise legislation, or
- an offence under Commonwealth, State or Territory law punishable by imprisonment for one year or longer (for an individual), or by a fine of 50 penalty units or more
- the extent of the person's or company's compliance, within 4 years of lodging the application, with any law administered by us (e.g. income tax, GST)
- whether the person has held an excise licence which has been cancelled, or
- the person's or company's financial resources.
- whether the person has participated in the management or control of a company that has had its excise licence cancelled
- whether the person is an undischarged bankrupt
- any misleading statement made in the application by the person, or
- where any false statement was made in the application - whether the person knew it was false.
False and misleading statements are discussed below in 'Where a person makes false or misleading statements in their application'. |
- whether a receiver has been appointed over the property, or part of the property, of the company
- whether the company is under administration under the Corporations Act 2001 (Corporations Act)
- whether there is a current deed of company arrangement in place under Part 5.3A of the Corporations Act, or
- whether the company is being wound up.
Where a person makes false or misleading statements in their application[57]
It is important that you provide information that is accurate and complete. If your application (i.e. your completed application form, any supporting documentation and any oral statements made), contains false or misleading statements we will take this into account. Misleading statements. With regard to this element, the term 'mislead' is not defined in the Excise Act. The Australian Oxford Dictionary, 2004, 2nd edn, Oxford University Press, Melbourne defines 'mislead' as follows:- cause (a person) to go wrong, in conduct, belief, etc.
- lead astray or in the wrong direction.
Example 3A You advise us that you have installed a state of the art security system at your premises. While true, you failed to advise us that a design fault has resulted in repeated false alarms to the point where you have switched off the security system and have no intention of re-engaging it. The design fault cannot be remedied. The only security actually in operation at the premises is a rusty padlock. The information you provided, whilst not false, could lead us to believe that your premises are secure. This is misleading. |
False statements
We can only take false statements into account if you knew they were false.[58] In essence, a statement is false if it is not true. A false statement may be made expressly, or via omission. An example of the former is where you state you have no criminal convictions when in fact you have been convicted. An example of the latter would be to leave the question on your application form in relation to criminal convictions blank when in fact you have been convicted. In both instances, a false statement has been made.Who are the associates that can be assessed under the fit and proper person test?[59]
To avoid situations where people with a high risk of non-compliance are able to exercise control over licence holders, certain associates can be assessed under the fit and proper person test. The word associate effectively takes its meaning from the Income Tax Assessment Act 1936 and is summarised below:- An associate of a natural person (other than in the capacity of trustee) includes:
- a relative[60] of the individual, for example, their spouse, parent, sibling, uncle, aunt
- a partner of the individual or a partnership in which the individual is a partner
- if a partner of the individual is a natural person otherwise than in the capacity of trustee, the spouse or child of the partner
- a trustee of a trust under which the individual or their associate benefits, or
- a company under the control of the individual or their associate.[61]
- Although an associate includes a spouse, a legally married spouse of a person who lives separately and apart on a permanent basis is not an associate.[62]
- An associate of a company includes:
- a partner of the company or a partnership in which the company is a partner
- if a partner of the company is an individual, the spouse or child of the partner
- a trustee of a trust under which the company or their associate benefits
- another entity (a company, partnership, trustee or an individual), or its associate(s) who controls the company, or
- another company which is under the control of the company or the company's associate.[63]
-
- has sufficient influence over the company, or
- holds a majority voting interest in the company.
- An associate of a trustee includes an entity or an associate of the entity that benefits or is capable of benefiting either directly or indirectly under the trust.[64]
- For a partnership an associate includes each partner of the partnership or associate of the partner.[65]
(2) Skills And Experience[66]
The next criterion for licensing relates to skills and experience. Skills and experience are not defined in the Excise Act or Excise Regulations. There is no Excise case law regarding skills and experience. In forming an opinion as to whether you have the required skills and experience we will consider your ability to:- carry out the activity requiring a licence
- conduct a business, and
- comply with excise obligations.
Example 3B Mr X, as a Director of Z Transport and Logistics Pty Ltd, applies for a storage licence. Neither Mr X nor any of his staff have the skills and experience to comply with the company's excise obligations. This poses a risk that excisable fuel products may be sold without adequate record keeping, and may adversely affect revenue and compliance. Therefore, when assessing this element of subsection 39A(2) in isolation, Z Transport and Logistics Pty Ltd would fail the requirements of skills and experience. However, a decision on granting a licence is made based on an assessment of all elements of subsection 39A(2). Z Transport and Logistics Pty Ltd may choose to address the deficiency in skills and experience by such measures as appointing a Manager who has the relevant skills and experience. |
(3) Physical Security Of The Premises[67]
Physical security relates to measures that prevent unauthorised access to excisable fuel products and thus protects against theft or loss of goods and excise revenue. In forming an opinion about the physical security at the premises, we will consider:- the nature of the site
- the kinds and quantities of goods to be kept, and
- the procedures and methods adopted to ensure the security of goods .
- construction(for example floor, walls, ceiling, windows and doors) and whether material is difficult to penetrate or remove
- barriers (for example fences or wire) to a standard that would prevent unauthorised access
- locks and bars
- alarms, security lighting, security guard patrols or closed-circuit TV cameras
- physical security of all warehouse facilities within the site, and
- fire alarms, smoke detectors, sprinklers etc.
- the ease with which goods can be handled, for example, bottles of spirits are easier to move than fuel in a large refinery tank
- the rate of excise duty applicable to the goods (goods that attract a greater rate of excise duty represent a greater revenue risk), and
- the greater the quantity of excisable goods to be dealt with, the higher the level of physical security that would be required.
- gate security system that would identify all people entering and leaving the site, and confirm their right to do so
- gate security system that would identify the type and quantity of all goods entering and leaving the site
- surveillance system
- procedures to handle and retain information from surveillance system (if there is one)
- access control, for example by limited distribution of keys and access swipe cards or codes
- security responses when breaches are detected, for example back to base system, and
- an independent security audit function to oversee all of the above.
(4) Suitability Of Plant And Equipment[68]
Plant and equipment are considered suitable if they are capable of performing the intended tasks and will allow you to properly account for excisable fuel products and calculate the correct amount of excise duty. Plant and equipment that are used in relation to goods at licensed premises include:- temperature measuring equipment
- storage tanks
- weighing equipment e.g. scales and weighbridges, and
- volume measuring equipment.
(5) Market For The Goods[69]
In this criterion, we are primarily concerned with the presence of an available market within Australia. That market must be legal. Licensing is concerned with minimising the risk of excisable fuel products entering an illicit market in Australia and the resultant loss of revenue. You must provide sufficient information to identify your proposed market. You may be able to demonstrate that you have a market by, for example, supplying:- evidence of contracts (including 'in principle' contracts) you have negotiated, or
- a business plan which outlines the market you have identified.
- a farmer who produces biodiesel to use in his farm equipment
- a person who produces biodiesel for their personal non-commercial use.
(6) Ability To Keep Proper Books Of Account[71]
This criterion is whether you can keep 'proper books of accounts and records' that enable us to audit those records. It is your ability to keep the required records that must be determined. You may be asked to demonstrate:- the recording systems you intend to use, whether they are manual or electronic
- where an electronic record keeping system is used, systems documentation showing details such as screens, reports available and security controls, and
- the internal documentation supporting the recording systems, ensuring that the recording systems will record sufficient detail.
(7) Delay Liability For Duty (Storage Licence Only)[72]
This criterion only relates to an application for a storage licence where the granting of the licence would delay liability for duty. The liability for excise is imposed on goods at the time of manufacture.[73] However, it is not actually paid until a later point. The wording in paragraph 39A(2)(k) "...delay the liability for duty" suggests that one is able to delay the point in time in which the liability arises. However, this is not possible as the imposition of excise, and therefore the time at which the liability arises, is not dependent on any further dealings or processes on those goods. It is only the payment of the liability, the duty, which can be delayed depending on how the goods are dealt with. We consider that the only possible interpretation of section 39A(2)(k) is that it operates to delay the time the liability must be paid. A storage licence allows for the storage of excisable goods on which duty has not been paid. It effectively allows a manufacturer to defer the payment or transfer the liability to a storage licence holder. The question then arises as to how far down the distribution chain payment of an excise liability may be deferred. It is our view that we may refuse to grant a storage licence where the grant of the licence would delay payment of duty beyond the point of storage occurring in the normal wholesale distribution of the goods. Using a different perspective, we may refuse to grant a storage licence when refusal is necessary to ensure that excise duty is paid before goods reach the retail level in the distribution chain. In forming an opinion as to whether the granting of an excise storage licence would delay liability for duty, we will consider:- the purpose for which the goods are to be stored, and
- whether the premises in question are for storage occurring in the normal wholesale distribution of the goods, or for storage beyond the normal wholesale distribution of the goods (for example, storage for a retail premises).
(8) Protect the Revenue[74]
The term 'necessary to protect the revenue' is not defined in the Excise Act.The meaning of 'protect the revenue' was considered by Deputy President Forgie in Martino and Australian Taxation Office.[75] She said:
' 50. ... The expression "protect the revenue" is not defined in the Act and I am not aware of any authorities that have considered it. The word "revenue" has been considered in Stephens v Abrahams (1902) 27 VLR 753 by Hodges J. ...Hodges J took: "... the 'revenue' to be moneys which belong to the Crown, or moneys to which the Crown has a right, or moneys which are due to the Crown, 51. The ordinary meanings of the word "protect" include "keep safe, take care of" ... and they would seem to be the senses in which the word is used in the expression "protect the revenue". Mr Martino's licence may only be cancelled if it is necessary to take care of the money belonging to the Crown in right of the Commonwealth. That has the aspect of ensuring that the Commonwealth receives all that it should in the form of any excise that is ultimately payable in respect of tobacco originally grown on Mr Martino's farm and keeps all that it receives. It also has the aspect of not spending more of the Commonwealth's money than need be spent in carrying out its supervisory duties and responsibilities under the Act and in ensuring that the tobacco is not marketed illegally in Australia, and so avoid the payment of excise duty, if it cannot be marketed legally. 52. What is meant by the word "necessary"? I have taken the view that the meaning adopted by Allen J in State Drug Crime Commission of NSW v Chapman (1987) 12 NSWLR 447: "As to the word 'necessary' it does not have, in my judgment, the meaning of 'essential'. The word is to be subjected to the touchstone of reasonableness. The concept is one as to what reasonably is necessary in a commonsense way.' While this case was in relation to tobacco, the finding is equally applicable to fuel. 'Protect the revenue' therefore means ensuring that the Commonwealth receives the full amount of excise duty that is ultimately payable and we do not spend more Commonwealth funds than necessary to carry out our responsibilities.3.3.2 WHAT ARE LICENCE CONDITIONS?
Licence conditions form part of your licence. They are restrictions, limitations or modifying circumstances. They may define permissible activities and require you to take certain actions if defined circumstances arise. If you fail to comply with a condition, we may suspend or cancel your licence.[76]For information about when we can suspend or cancel your licence refer to Chapter 4 - Licensing: Suspension & Cancellation. |
- the Excise Act, and
- us ('special conditions').
Conditions imposed under the Excise Act
You must advise us in writing within 30 days if:[78]- you or any person participating in the management or control of a licensed company or premises is charged with or convicted of:
- an offence against a provision of the Excise Act, or
- an offence against a law of the Commonwealth, a State or a Territory that is punishable by imprisonment for a period of one year or longer or by a fine of 50 penalty units or more
- you become bankrupt
- a person not listed in the licence application starts to participate in the management or control of the licensed premises or company, as the case may be
- there is a change in the membership of a partnership that holds a licence
- a company that holds a licence comes under receivership, administration or begins to be wound up
- there is a change that substantially affects the physical security of the licensed premises or plant and equipment used in relation to excisable goods at the premises
- you hold a manufacturer licence and you cease to manufacture excisable goods at the licensed premises, or
- you hold a storage licence and you cease to keep and store goods at the licensed premises.
Special conditions
We can also impose special conditions on your licence if we find it necessary to protect the revenue or ensure compliance with the Excise Act.[79] Examples of conditions that have been imposed under this provision are:- the trustee for a trust to notify the Collector of the appointment of a new trustee in writing and prior to the appointment of the new trustee
- restrict the storage of excisable goods (by a storage licence holder) to ship's stores and aircraft's stores, and/or
- restrict the quantity of excisable goods that a licensed manufacturer may manufacture.
For more information about your review rights refer to Chapter 8 - Reviews and objections. |
3.3.3 WHAT ARE SECURITIES?
We can use special conditions as a mechanism to increase the level of protection of the revenue or to ensure compliance with the Excise Act. However, prior to granting the licence we may also require you to provide a security to achieve the same result. Even if we don't require a security prior to the granting of the licence, we may ask for a security at a later time. We can also ask you to increase the value of any security you may already have given.[81] A security can be a bond, guarantee, cash deposit or similar financial product for an amount of money which may be forfeited if there is a failure to comply with the Excise Act. It is not necessary for a liability to arise as a result of the failure to comply, for the security to be forfeited. There is no statutory limit to the amount of a security but the amount is generally set by reference to the level of revenue at risk. We cannot apply these securities against other tax debts. We review securities every three years, at which time they may be extended, revised or cancelled. The decision to require a security is not reviewable under the objection process. However, there may be other avenues for review, for example you may seek an informal review of our decision.For information about your review rights refer to Chapter 8 - Reviews and objections. |
3.3.4 ASSESSING YOUR APPLICATION TO RENEW YOUR LICENCE
Licences are only valid for a specified period. Renewal of a licence is not automatic and you must apply to renew your licence before it expires. In assessing an application to renew a licence we consider the same criteria that exist for cancelling a licence. That is, if reasons exist for us to cancel your licence (assuming that it had not expired) then we may decide not to renew your licence.For more information about the criteria for cancelling a licence refer to Chapter 4 - Licensing: Suspension & cancellation. | |
If you have applied before the date of expiration on your licence but we have not made a decision by this date, the licence remains in force until such time as we do make a decision. |
For more information about your review rights refer to Chapter 8 - Reviews and objections. |
- alter existing conditions on your licence
- impose new conditions, or
- require you to provide a financial security.
If you have not applied to renew your licence when the licence expires on 30 September, you can no longer carry out excise related activities. |
3.4 PROCEDURES
3.4.1 WHAT HAPPENS IF MY LICENCE IS NOT GRANTED?
If we do not grant a licence, we will notify you of the decision and provide you with an explanation for our decision. If you are not satisfied with our decision, you can ask for a review by lodging an objection within 60 days of the day we notify you.[82]For more information about your review rights refer to Chapter 8 - Reviews and objections. |
3.4.2 WHAT WILL HAPPEN IF MY LICENCE IS GRANTED?
If we grant you a licence, we will post it to you. All special conditions will form part of the licence. We will also provide you with an establishment number for the premises specified on your licence. This will be needed in some of your dealings with us. You may receive a visit or phone call from us to see whether you understand your obligations or need further assistance to comply.3.4.3 HOW DO I RENEW MY LICENCE?
We will send you an invitation to renew your licence at least six weeks before the licence expires. We will also send an application form containing your details. You must verify the details on the application, provide any required information, sign and return it to us before your licence expires.Your existing licence will remain valid until we make a decision about your application for renewal.[83] |
Example 3C Your licence is due to expire on 30 September 2008 (the expiry day). On 1 September 2008 you apply to renew the licence. We have not decided the application by the end of 30 September 2008. The licence continues in force automatically past 30 September 2008 until we decide the application. On 15 October 2008 we decide to renew the licence. The renewed licence expires on 30 September 2011. |
If you wish to renew your licence but you have not received an invitation to renew within four weeks of the date of expiry you need to contact us. |
3.4.4 WHAT DO I DO IF I NEED MORE INFORMATION?
If you need more information on licensing matters contact us as follows:- phone 1300 137 292
- fax (03) 9285 1168, or
- write to us at
Australian Taxation Office
PO Box 3001
PENRITH NSW 2740
3.5 WHAT PENALTIES CAN APPLY FOR OFFENCES IN RELATION TO MAKING AN APPLICATION?
The following are the penalties that may apply after conviction for an offence. False or misleading statements If you make a false or misleading statement, or an omission from a statement in respect of duty payable on particular goods, to us, a penalty not exceeding the sum of 50 penalty units and twice the amount of duty payable on those goods.[84]3.6 TERMS USED
Excisable fuel products Excisable goods are goods on which excise duty is imposed. Excise duty is imposed on goods that are manufactured or produced in Australia and listed in the Schedule to the Excise Tariff Act. As these guidelines deal with fuel products, we have used the term excisable fuel products. Excisable fuel products include:- petrol
- diesel
- crude petroleum oil
- heating oil
- kerosene
- fuel ethanol, and
- biodiesel.
Penalty units
A penalty unit is specified in section 4AA of the Crimes Act 1914 and, at the time of writing, is $110.
3.7 LEGISLATION (quick reference guide)
In this chapter we have referred to the following legislation:3.7.1 Excise Act 1901
Section 16 - Right to require security Section 17 - Form of security Section 18 - General security may be given Section 19 - Cancellation of bonds Section 20 - New sureties Section 21 - Form of security Section 22 - Effect of security Section 39 - Applications for licences Section 39A - It is in the Collector's discretion whether to grant licence Section 39B - Determining whether a natural person is fit and proper Section 39C - Determining whether a company is fit and proper Section 39D - Conditions of licence Section 39DA - Changing licence conditions on own initiative Section 39F - Renewal of licences Section 39G - When the Collector may suspend a licence Section 39Q - Review of decisions Section 120 - Offences3.7.2 Excise Tariff Act 1921
Section 5 - Duties of excise The Schedule3.7.3 Income Tax Assessment Act 1997
Section 995-1 - Definitions3.7.4 Income Tax Assessment Act 1936
Section 318 - Associates3.7.5 Corporations Act 2001
Section 9 - Dictionary Part 5.3A - Administration of a company's affairs with a view to executing a deed of company arrangement3.7.6 Crimes Act 1914
Section 4AA - Penalty units04 LICENSING: Suspension & cancellation
OUR COMMITMENT TO YOU The information in this publication is current at May 2009. This publication is an expression of the Commissioner's opinion on the operation of fuel excise legislation. This publication is not legally or administratively binding on the Commissioner and is not a 'public ruling' for the purposes of Section 105-60 or Division 358 of Schedule 1 to the Taxation Administration Act 1953. The law does not provide for legally binding rulings on fuel excise legislation. If you feel this publication does not fully cover your circumstances, please seek help from the Tax Office or a professional adviser. Since we regularly revise our publications to take account of any changes to the law, you should make sure this edition is the latest. The easiest way to do this is by checking for a more recent version on our website at www.ato.gov.au |
4.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO SUSPENSIONS AND CANCELLATIONS |
4.1 PURPOSE
This chapter deals with:- what happens when you cease your business
- when your licence can be suspended or cancelled
- service of notices, and
- penalties that can apply to offences in relation to suspensions and cancellations.
4.2 INTRODUCTION
Your licence remains in force until it expires or is cancelled. However, activities approved under your licence may be restricted if we suspend your licence. Suspension may be a temporary measure or may lead to the cancellation of your licence. We can cancel your licence if:- you ask us to do so (for example, where you intend to cease business), or
- we make a decision to do so because one or more of the following criteria are present:
- you or an associate are not 'fit and proper' as an individual or company
- a director, officer or shareholder who participates in the management or control of the company is not a 'fit and proper' person
- a person who participates in the management or control of the premises is not a 'fit and proper' person
- you do not have, or have available to you, the skills and experience required to carry out the activity authorised by the licence
- the physical security of the premises is inadequate
- the plant and equipment used at the premises are such that there is inadequate protection of the revenue in relation to the goods at the premises
- you have no market for the goods covered by the licence
- you are not keeping proper books of account for audit purposes
- you have breached a condition of your licence
- you have made a false or misleading statement to us [85]
- suspension is necessary for the protection of the revenue, or
- if you are the holder of a manufacturer licence or storage licence, suspension is necessary to ensure you comply with excise law.
4.3 POLICY AND PRACTICE
4.3.1 WHAT HAPPENS IF I CEASE MY EXCISE BUSINESS?
Your licence conditions require you to notify us within 30 days if you permanently cease activities that require an excise licence. To finalise your excise obligations you must request in writing a cancellation of your licence. Before we can cancel your licence we must be satisfied that you no longer have any excisable fuel products. To be satisfied of this we may:- arrange a final audit of goods at the licensed premises, and
- work out if you are liable to pay any excise duty.
- pay any outstanding excise duty on goods held at the licensed premises and then dispose of them as you wish, or
- move the goods to another licence holder's premises, provided you have permission from us to move goods to those premises.[86]
4.3.2 WHEN CAN MY LICENCE BE SUSPENDED AND/OR CANCELLED?
What is the difference between suspension and cancellation?
Suspension of a licence is a temporary measure we may take that limits the activities you can undertake during the period of suspension. It could be followed by cancellation of the licence or revocation of the suspension. Cancellation is a permanent measure which has the effect of prohibiting you from undertaking the activities for which you were previously licensed.When can my licence be suspended or cancelled?
We can suspend or cancel your licence if we have reasonable grounds for believing:[88]- you are not 'fit and proper' as an individual or company*
- a director, officer or shareholder who participates in the management or control of the company is not a 'fit and proper' person*
- a person who participates in the management or control of the premises is not a 'fit and proper' person*
- you are an associate of a person or a company that is not 'fit and proper'*
- you do not have, or have available to you, the skills and experience required to carry out the activity authorised by the licence*
- the physical security of the premises is inadequate*
- the plant and equipment used at the premises are such that there is inadequate protection of the revenue in relation to the goods at the premises*
- you have no market for the goods covered by the licence*
- you are not keeping proper books of account for audit purposes
- you have breached a condition of your licence
- you have made a false or misleading statement to us
- suspension is necessary for the protection of the revenue*, or
- if you are the holder of a manufacturer licence or storage licence, suspension is necessary to ensure that you comply with excise law.
- you are not keeping proper books of account for audit purposes. For this criterion, we are assessing your actual record keeping practices during the licence period and whether they are in an adequate state for an audit.
- you have breached a condition of your licence. A breach means you have not complied with a condition. In deciding whether or not to suspend we will take into account the following:
- the severity of the breach
- the circumstances surrounding the breach, and
- what the condition is (i.e. the risk it is addressing).
- you have made a false or misleading statement to us. In considering your initial application the false or misleading statements we take into account are in your application. Once you have been granted a licence we can take into account any statements (including for example in a return, letter or response to a question) you have made in relation to your excise activities.
- suspension is necessary to ensure you comply with excise law. Where we consider that you are not complying with your obligations under the Excise Act, for example, if you have been manufacturing excisable fuel products in contravention of your manufacturer licence.[89]
What happens if my licence is suspended?
If we believe your conduct warrants consideration of suspension of your licence we will generally advise you of our concerns and provide you with an opportunity to rectify the issues identified. If we decide to suspend your licence, this will be done by serving a Notice of suspension. The notice may be served on you, or given to a person who appears to participate in the management or control of the licensed premises. A Notice of suspension will state that, if you want to stop the cancellation of your licence, you must provide us with a written statement, within seven days of the notice being served, giving reasons why your licence should not be cancelled. We will include our reasons for deciding to suspend your licence with the Notice of suspension. The notice will also state when the suspension takes affect, which could be immediately. When your licence is suspended, unless you have written permission from us, it is against the law to:- if you are the holder of a manufacturer licence, manufacture excisable fuel products, or
- if you are the holder of a storage licence, keep or store excisable fuel products at licensed premises.[90]
- keep or store goods at your licensed premises
- carry out a process at your premises, or
- move goods from your premises to another place.
- require the owner (you or a third party) of excisable fuel products to move the goods from your premises to another place
- require payment of any costs incurred by us as a result of the suspension
- carry out a stocktake so that the total excise liability is known, and
- take control of your licensed premises and any excisable fuel products stored at these premises.
For more information about your review rights refer to Chapter 8 - Reviews and objections. |
What happens if my licence is cancelled?
We can cancel your licence for the same reasons we can suspend your licence.We can cancel your licence without previously suspending your licence. This may occur where we consider the issues require immediate action. For example systemic delivery of excisable fuel products without payment of required duty. |
- pay the duty on the goods, or
- move the goods to another place in accordance with our permission.
This notice is served in the same manner as the Notice of cancellation. |
- lodged a written claim for the goods, or
- paid the duty and other movement and storage related expenses
If we cancel your licence, you must retain all records that you have been directed to keep, for the period you have been directed. |
For more information about your review rights refer to Chapter 8 - Reviews and objections. |
Can I apply for another licence if I have had a licence cancelled?
Yes, you can apply for another licence. However we will take the reasons for the cancellation into account when considering any new application.4.4 PROCEDURES
4.4.1 SERVICE OF NOTICES
Notices of suspension or cancellation and directions to deal with excisable fuel products will be served either:[94]- personally or by post[95] on you, or
- personally on a person who, at the time the notice is served, appears to participate in the management or control of the licensed premises.
4.4.2 WHAT DO I DO IF I NEED MORE INFORMATION?
If you need more information on suspension or cancellation of a licence contact us as follows:- phone 1300 137 292
- fax (03) 9285 1168, or
- write to us at
Australian Taxation Office
PO Box 3001
PENRITH NSW 2740
4.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO SUSPENSIONS AND CANCELLATIONS
The following are the penalties that may apply after conviction for an offence. Manufacture If you manufacture excisable fuel products when your manufacturer licence is suspended, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products.[96] Keep or store If you store excisable fuel products when your storage licence is suspended, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products.[97] Remove If your licence has been cancelled or expired you must not remove excisable fuel products on which duty has not been paid. The penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products.[98]4.6 TERMS USED
Excisable fuel products Excisable goods are goods on which excise duty is imposed. Excise duty is imposed on goods that are manufactured or produced in Australia and listed in the Schedule to the Excise Tariff Act. As these guidelines deal with fuel products, we have used the term excisable fuel products. Excisable fuel products include:- petrol
- diesel
- crude petroleum oil
- heating oil
- kerosene
- fuel ethanol, and
- biodiesel.
4.7 LEGISLATION (quick reference guide)
In this chapter we have referred to the following legislation:4.7.1 Excise Act 1901
Section 26 - Licensed manufacturers to manufacture in accordance with Act and licence Section 39G - When the Collector may suspend a licence Section 39J - Method of suspension Section 39K - Activities that are prohibited during suspension Section 39L - Cancellation of licences Section 39M - Removal of goods on cancellation etc. of licence Section 39N - Removal of goods by Collector on cancellation etc. of licence. Section 39P - Service of notices Section 39Q - Review of decisions4.7.2 Excise Tariff Act 1921
The Schedule4.7.3 Crimes Act 1914
Section 4AA - Penalty units05 MOVEMENT PERMISSIONS
OUR COMMITMENT TO YOU The information in this publication is current at May 2009. This publication is an expression of the Commissioner's opinion on the operation of fuel excise legislation. This publication is not legally or administratively binding on the Commissioner and is not a 'public ruling' for the purposes of Section 105-60 or Division 358 of Schedule 1 to the Taxation Administration Act 1953. The law does not provide for legally binding rulings on fuel excise legislation. If you feel this publication does not fully cover your circumstances, please seek help from the Tax Office or a professional adviser. Since we regularly revise our publications to take account of any changes to the law, you should make sure this edition is the latest. The easiest way to do this is by checking for a more recent version on our website at www.ato.gov.au |
5.3.9 WHEN AND HOW CAN A MOVEMENT PERMISSION BE REVOKED OR CANCELLED? |
5.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO MOVEMENT PERMISSIONS? |
5.1 PURPOSE
This chapter deals with:- why you need a movement permission
- different movement permission types
- whether you can get a movement permission
- what is included in a movement permission
- whether the receiving premises have to be licensed
- whether you will need to pay a security
- what happens when your movement permission is granted
- your responsibilities
- what happens if your application for a movement permission is not approved
- when and how a movement permission can be revoked or cancelled
- how to apply for a movement permission
- how to amend a continuing movement permission, and
- penalties that can apply to offences in relation to movement permissions.
5.2 INTRODUCTION
Under the excise system, control of goods from the time of creation to the point of authorised delivery of the goods into the Australian domestic market, or export, lies with the Commissioner. To maintain this control, the Excise Act requires that excisable goods are not to be moved without permission.[99] We refer to this form of permission as a movement permission. It is a permission we provide in writing that authorises you to move specified goods from a specified place to another.[100] This permission may be subject to conditions. The permission holder retains responsibility for any excise liability arising on the excisable fuel products until they are taken up into the stock of the new premises.5.3 POLICY AND PRACTICE
5.3.1 WHAT DIFFERENT PERMISSION TYPES ARE THERE?
Depending on your circumstances, you may apply for a permission to move excisable fuel products once (single permission) or excisable fuel products of a particular kind on a continuing basis (continuing permission). Continuing permissions are used where you have a need to move excisable fuel products in a regular pattern (for example, a delivery each week to the same premises). A single permission is used when movements are not to a continuing or regular pattern to the same premises.- There are four types of movement permission:
- Single movement permission (non-export) - a permission to move excisable fuel products from one specified place to another specified place (effective for one movement)
- Continuing movement permission (non-export) - a permission to move excisable fuel products of a kind specified from one specified place to another specified place on a continuing basis
- Single movement permission (export) - a permission to move excisable fuel products to a place of export (effective for one movement), or
- Continuing movement permission (export) - a permission to move excisable fuel products of a kind specified to a place of export on a continuing basis.
export movement permission is not an authority to export. You must obtain this separately from Customs. |
5.3.2 CAN I GET A MOVEMENT PERMISSION?
You can be granted a movement permission if you are the owner of:- the licensed place from where the goods are despatched or
- the licensed place where the goods are received.
5.3.3 WHAT IS INCLUDED IN A MOVEMENT PERMISSION?
Each movement permission we approve contains three parts: 1. The permission This specifies- the permission holder, and
- the goods by tariff item that can be moved under the permission.
- the despatching premises and destination
- the date of despatch
- the number and type of packages
- a description of the goods
- a statement that the goods are underbond, and
- any other information necessary to permit the goods to be dealt with at the destination.
- the premises from which the goods can be removed
- the premises to which the goods can be moved, and
- for single movement permissions, the period or dates in which the goods may be moved.
5.3.4 DOES THE RECEIVING PREMISES HAVE TO BE LICENSED?
Generally, the receiving premises should be licensed. However, we may authorise underbond movement of goods to an unlicensed 'specified place', for example a waste destruction facility.5.3.5 WILL I NEED TO PAY A SECURITY?
Prior to granting a movement permission, we may also require you to provide a security to protect the revenue or ensure compliance with the Excise Act. Even if we don't require a security prior to the granting of the movement permission, we may ask for a security at a later time. We can also ask you to increase the value of any security you may already have given.[101] A security can be a bond, guarantee, cash deposit or similar financial product for an amount of money which may be forfeited if there is a failure to comply with the Excise Act. It is not necessary for a liability to arise as a result of the failure to comply, for the security to be forfeit. There is no statutory limit to the amount of a security but the amount is generally set by reference to the level of revenue at risk. As part of assessing your application for a movement permission, we will decide whether you must provide a security. We will take into account:- whether you currently hold an excise licence
- whether the despatching and receiving premises are licensed
- the type of goods involved
- the amount of the liability on the goods
- the tax compliance record of
- the applicant for the permission
- the despatching premises
- the receiving premises, and
- the susceptibility of the goods to be lost or diverted into home consumption without the payment of duty.
For information about your review rights refer to Chapter 8 - Reviews and objections. |
5.3.6 WHAT HAPPENS WHEN MY MOVEMENT PERMISSION IS GRANTED?
When your movement permission is granted, it will be sent to you. You can then move your goods in accordance with the schedule. You will need to keep appropriate records to track the movement of your goods.5.3.7 WHAT ARE MY RESPONSIBILITIES?
Where you have had possession, custody or control of goods we may request you (the permission holder) to account for the goods. If you are able to demonstrate that the goods have been lawfully moved under a movement permission, this will be considered a satisfactory accounting. It is important that you keep good records of any movements of goods from your premises. If you cannot satisfactorily account for the goods, we may demand an amount equal to the duty that would have been payable on the goods.[102] The permission holder is accountable for the goods:- from the time they are removed from the despatching premises, and
- until they are delivered to the receiving premises.
In the exceptional case where the goods are moved to unlicensed premises, accountability for the goods remains with you, as the permission holder. |
5.3.8 WHAT HAPPENS IF MY APPLICATION IS NOT APPROVED?
If we do not approve your application for a movement permission, or to amend your existing movement permission, we will notify you in writing. If you are not satisfied with our decision, you can ask us to review it. You will not be able to move the goods to the place nominated in the application.For information about your review rights refer to Chapter 8 - Reviews and objections. |
5.3.9 WHEN AND HOW CAN A MOVEMENT PERMISSION BE REVOKED OR CANCELLED?
A continuing movement permission remains in effect until it is cancelled.[103] We can cancel your movement permission if:- you ask us to do so
- we consider that there is a risk to the revenue, or
- we have cancelled the licence of the receiving or despatching premises.[104]
- you are served with the cancellation notice, or
- specified on the cancellation notice.
A decision to revoke or cancel a movement permission is not a reviewable decision. | |
For information about your review rights refer to Chapter 8 - Reviews and objections. |
5.4 PROCEDURES
5.4.1 HOW DO I APPLY FOR A MOVEMENT PERMISSION?
To apply for a movement permission, you should complete the relevant form, available on our website. If you do not have control of the proposed receiving premises (licensed or unlicensed), we require you to obtain a letter from the operator of these premises stating that they will accept responsibility for the underbond goods when received. The application forms contain details of the statement required from the operator of the receiving premises.If you need to deliver goods to new premises within specified periods please ensure that you allow sufficient time for your application to be determined. Generally, we will make a decision on your application within 28 days unless we need further information. |
5.4.2 HOW DO I AMEND MY CONTINUING MOVEMENT PERMISSION?
If you wish to amend your existing continuing movement permission (for example, change the schedule of receiving premises), you must send us either:- a new application form with the amending details, or
- a letter including the permission number and necessary changes.
5.4.3 WHAT DO I DO IF I NEED MORE INFORMATION?
If you need more information on movement permissions contact us as follows:- phone 1300 137 292
- fax (03) 9285 1168, or
- write to us at
Australian Taxation Office
PO Box 3001
PENRITH NSW 2740
5.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO MOVEMENT PERMISSIONS?
The following are the penalties that may apply after conviction for an offence. Move If you move excisable fuel products without a movement permission, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products.[104] If you move excisable fuel products contrary to your movement permission, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products.[105]5.6 TERMS USED
Excisable fuel products Excisable goods are goods on which excise duty is imposed. Excise duty is imposed on goods that are manufactured or produced in Australia and listed in the Schedule to the Excise Tariff Act. As these guidelines deal with fuel products, we have used the term excisable fuel products. Excisable fuel products include:- petrol
- diesel
- crude petroleum oil
- heating oil
- kerosene
- fuel ethanol, and
- biodiesel.
5.7 LEGISLATION (quick reference guide)
In this chapter we have referred to the following legislation:5.7.1 Excise Act 1901
Section 16 - Right to require security Section 17 - Form of security Section 18 - General security may be given Section 19 - Cancellation of bonds Section 20 - New sureties Section 21 - Form of security Section 22 - Effect of security Section 60 - Persons to keep excisable goods safely Section 61A - Permission to remove goods that are subject to the CEO's control Section 117A - Unlawfully moving excisable goods5.7.2 Excise Tariff Act 1921
The Schedule5.7.3 Crimes Act 1914
Section 4AA - Penalty units5.7.4 Acts Interpretation Act 1901
Section 33 - Exercise of powers and duties06 PAYMENT OF DUTY
OUR COMMITMENT TO YOU The information in this publication is current at August 2012. This publication is an expression of the Commissioner's opinion on the operation of fuel excise legislation. This publication is not legally or administratively binding on the Commissioner and is not a 'public ruling' for the purposes of Division 358 of Schedule 1 to the Taxation Administration Act 1953. If you feel this publication does not fully cover your circumstances, please seek help from the Tax Office or a professional adviser. Since we regularly revise our publications to take account of any changes to the law, you should make sure this edition is the latest. The easiest way to do this is by checking for a more recent version on our website at www.ato.gov.au |
6.1 PURPOSE
This chapter deals with:- when duty is payable
- when duty is payable under periodic settlement
- when duty is payable under prepayment of excise duty
- when duty is not payable
- how to work out the amount of duty you're liable to pay, including tariff proposals and quotas
- what to do if you have a dispute as to the duty
- whether you have to account for excisable fuel products
- how to get a Periodic settlement permission (PSP)
- what your PSP will include
- what to do to deliver fuel products into the Australian domestic market
- how to lodge excise returns and pay excise duty
- what to do if you have made an error on your excise return, and
- penalties that can apply to offences in relation to payment of duty.
6.2 INTRODUCTION
Excise duty is imposed at the time of manufacture of excisable fuel products.[106] However, the duty is not required to be paid at the time of manufacture. This chapter focuses on the payment of duty and the factors that influence when and how much duty is payable. To ensure the duty is ultimately acquitted, excisable fuel products remain subject to our control until they are delivered:- into the Australian domestic market, or
- for export to a place outside Australia.[107]
- payment of the duty
- export of the goods
- remission, or
- use of the goods in the manufacture of other excisable goods.
6.3 POLICY AND PRACTICE
6.3.1 WHEN IS DUTY PAYABLE?
When the liability for duty becomes payable depends on how authority is given to deliver the excisable fuel products into the Australian domestic market. Authority to deliver excisable fuel products into the Australian domestic market can be given on a continuing basis, known as a periodic settlement permission (PSP),[108] or on an ad hoc basis, known as prepayment of duty.[109]6.3.2 WHEN IS DUTY PAYABLE UNDER A PERIODIC SETTLEMENT PERMISSION?
Under a PSP the duty is paid after the excisable fuel products are delivered into the Australian domestic market. To understand when the duty is paid in the case of periodic settlement requires an understanding of what the permission is and what your obligations are under such permission. A PSP allows you to report deliveries and to pay duty on a periodic basis after the goods have been delivered into the Australian domestic market.[110] Periodic settlement is the most common arrangement for the delivery of goods into the Australian domestic market. You may apply for a PSP that covers any recurring seven-day reporting period.[110A] You may specify in your application the 7 day period you wish to use, for example, Wednesday to Tuesday.[110B] The application must be made on the approved form[110C]. You may apply for a monthly PSP if you are either:- a small business entity;[110D] or
- included in a particular class of person or you deliver goods that are of a particular kind[110E].
The class of person or particular kind of goods must be prescribed in the Excise Regulations 1925. |
- your name as the holder of the PSP
- the kind of goods to which the PSP applies
- the place from which the goods may be delivered
- the start date of the PSP and whether it is for a seven-day or monthly period; and
- any special requirements of the periodic settlement.[110H]
For information about your review rights refer to Chapter 8 - Reviews and objections. |
- lodge an excise return, on the first business day following the end of the 7 day period specified in your PSP. (The return details the goods you have delivered into the Australian domestic market during the settlement period).
- at the time you lodge your return, pay any duty owing at the rate applicable when the goods were delivered into the Australian domestic market. [110K]
A 'business day' is a day that is not a Saturday or Sunday or a public holiday in the place where you lodge your return. |
- you do not have any excise duty to pay,[110N]
- you are a small business entity and have a PSP for a monthly period and have advised us in writing that you cease to meet the requirements of a small business entity,[110O] or
- you are included in a particular class of person and have a PSP for a monthly period and have advised us in writing that you are no longer in the class of person. [110P].
You do not need to have an excise licence to have a PSP. |
Example 6A Buy Me Pty Ltd (Buy Me) does not hold an excise licence and does not qualify as a small business entity. A licensed manufacturer manufactures excisable fuel products for Buy Me under contract. The fuel products are not of a particular class of goods prescribed in the regulations of the Excise Act. Buy Me is also not included in a class of person prescribed in the regulations of the Excise Act. Under the terms of the contract, Buy Me has title to the goods from the time of manufacture and is responsible for paying the excise duty liability. Buy Me applied for, and was granted, a seven-day PSP for the period Tuesday to Monday. Therefore, Buy Me is able to arrange delivery of the excisable fuel products into the Australian domestic market and defer payment of excise duty on those goods, until after the end of period. On the first working day after the end of the period (i.e. Tuesday, unless it is a public holiday in which case it will be due on Wednesday) Buy Me must lodge an excise return for any excisable fuel products delivered during the period and pay the excise duty owing on those goods. We will send Buy Me written confirmation after the excise return has been processed. |
6.3.3 WHEN IS DUTY PAYABLE UNDER PREPAYMENT OF EXCISE DUTY?
Under prepayment, the duty is paid before the excisable fuel products are delivered into the Australian domestic market. If you do not hold a PSP, you must receive a Delivery authority from us before you are allowed to deliver the quantity of excisable fuel products detailed in the delivery authority into the Australian domestic market. We require you to pay any applicable duty before we give you a Delivery authority. To request a Delivery authority you need to lodge an excise return (NAT4285). That is, you must:
|
You must not deliver excisable fuel products into the Australian domestic market before receiving the Delivery authority. |
6.3.4 WHEN IS DUTY NOT PAYABLE?
There are circumstances in which no duty will be payable on excisable goods. These include where:- goods are classified to an item or subitem with a FREE rate of duty
- goods are delivered for export
- a full remission circumstance applies, or
- excisable fuel products that are subject to our control are used in the manufacture of other excisable fuel products.
6.3.5 HOW DO I WORK OUT THE AMOUNT OF DUTY TO PAYABLE?
To work out how much duty you need to pay you will need to:- check whether your fuel products are excisable fuel products according to the Schedule to the Excise Tariff Act[112] and identify the correct duty rate
- work out the quantity of fuel products subject to duty, in each tariff subitem, that you deliver into the Australian domestic market
- multiply the quantity of fuel products by the rate of duty on the excisable fuel products, and
- add up the total duty payable for each subitem to work out total duty to be paid.
(i) Classifying excisable fuel products
The Schedule to the Excise Tariff Act (Schedule) lists those goods that, if manufactured or produced in Australia, are subject to excise. The Schedule also contains the rate of duty applicable to the goods. For excisable fuel products the relevant part of the Schedule is as follows:Tariff Item | Subitem | Description of Goods | Rate* |
10 | Goods as follows: (a) petroleum condensate and stabilised crude petroleum oil for use otherwise than:
(b) topped crude petroleum oil; (c) refined or semi-refined liquid products derived from petroleum, other than such products for use (other than in an internal combustion engine) in refining petroleum condensate or stabilised crude petroleum oil; (d) liquid hydrocarbon products derived through a recycling, manufacturing or other process; (da) liquefied petroleum gas; (db) liquefied natural gas; (dc) compressed natural gas (e) denatured ethanol for use as fuel in an internal combustion engine; (f) biodiesel (g) blends of 1 or more of the above goods (with or without other substances), other than blends covered by subsection 77H (1) or (3) of the Excise Act 1901 ; but not including the following: (h) goods classified to item 15; (i) waxes, liquefied petroleum gas and bitumen (j) good covered by section 77HA or 77HB or the Excise Act 1901 | ||
10.1 | Petroleum condensate | $0.38143 per litre | |
10.2 | Stabilised crude petroleum oil | $0.38143 per litre | |
10.3 | Topped crude petroleum oil | $0.38143 per litre | |
10.5 | Gasoline (other than for use as fuel in aircraft) | $0.38143 per litre | |
10.6 | Gasoline for use as fuel in aircraft | $0.08616 per litre | |
10.7 | Blends of gasoline and ethanol | The amount of duty worked out under section 6G | |
10.10 | Diesel (other than biodiesel) | $0.38143 per litre | |
10.11 | Blends of diesel and ethanol | The amount of duty worked out under section 6G | |
10.12 | Blends of diesel and biodiesel | The amount of duty worked out under section 6G | |
10.15 | Heating oil | $0.38143 per litre | |
10.16 | Kerosene (other than for use as fuel in aircraft) | $0.38143 per litre | |
10.17 | Kerosene for use as fuel in aircraft | $0.09536 per litre | |
10.18 | Fuel oil | $0.38143 per litre | |
10.19A | Liquefied petroleum gas, other than liquefied petroleum gas exempted from excise duty by section 77HB of the Excise Act 1901 | $0.05 per litre | |
10.19B | Liquefied natural gas, other than liquefied natural gas exempted fro excise duty by section 77HB of the Excise Act 1901 | $0.1045 per kilogram | |
10.19C | Compressed natural gas, other than compressed natural gas exempted from excise duty by section 77HA of the Excise Act 1901 | $0.1045 per kilogram | |
10.20 | Denatured ethanol for use as fuel in an internal combustion engine | $0.38143 per litre | |
10.21 | Biodiesel | $0.38143 per litre | |
10.25 | Liquid aromatic hydrocarbons consisting principally of benzene, toluene or xylene or mixtures of them (other than goods covered by section 77J of the Excise Act 1901) | $0.38143 per litre | |
10.26 | Mineral turpentine (other than goods covered by section 77J of the Excise Act 1901) | $0.38143 per litre | |
10.27 | White spirit (other than goods covered by section 77J of the Excise Act 1901) | $0.38143 per litre | |
10.28 | Petroleum products (other than blends) not elsewhere included (other than goods covered by section 77J of the Excise Act 1901) | $0.38143 per litre | |
10.30 | Blends of 1 or more of the above goods (with or without other substances) not elsewhere included that can be used as fuel in an internal combustion engine (other than goods covered by section 77J of the Excise Act 1901)
| The amount of duty worked out under section 6G | |
15 | Goods as follows, other than: (a) goods for use as a fuel; and (b) exempt oils and hydraulic fluids | ||
15.1 | Petroleum-based oils (including lubricant/fluid/oil products) and their synthetic equivalents but not greases | $0.05449 per litre | |
15.2 | Petroleum-based oils (including lubricant/fluid/oil products and greases) and their synthetic equivalents, recycled for use as oils (including lubricant/fluid/oil products) but not greases | $0.05449 per litre | |
15.3 | Petroleum-based greases and their synthetic equivalents | $0.05449 per kilogram | |
15.4 | Petroleum-based oils (including lubricant/fluid/oil products and greases) and their synthetic equivalents, recycled for use as greases | $0.05449 per kilogram |
(ii) Working out quantities of excisable fuel products
We measure fuel quantity in litres or, in some cases, kilograms. However, the volume of fuel varies with temperature. To work out the liquid fuel quantity for excise duty purposes, the fuel volume is generally measured at a temperature of 15 degrees Celsius, which is an industry standard, and the quantity rounded to the nearest whole litre. The method used to calculate the litres figure is the standard conversion of a weight measurement to a liquid measurement, which is to take the weight and divide it by the density corrected to 15 degrees Celsius. If you are dealing with LPG there are other factors to be considered when determining the volume. These factors can include density and vapour pressure.For more information on measuring the volume of liquid fuels please refer to Excise (Volume of Liquid Fuels - Temperature Correction) Determination 2011 (No. 1) |
For more information on measuring the volume of CNG please refer to Excise (Mass of CNG) Determination 2012 (No. 1) |
- record the product in your stock records, and
- include the product on an excise return, for the period in which it is delivered into the Australian domestic market.
Example 6B 100 kilograms of fuel oil at a density of 0.94 converts to 106 litres: | |
100 / 0.94 = 106.38 rounded to 106 litres |
(iii) Calculating duty payable on each excisable fuel product
The rate of duty is set out in the Schedule to the Excise Tariff Act. The rate of duty you use is the rate contained in the working tariff for the subitem. It will also depend on whether you have a PSP. If you do, it is the rate applicable at the time you deliver the excisable fuel products into the Australian domestic market. If you do not have a PSP, then it is the rate applicable at the time you make the pre-payment.[113]
Example 6C When goods are delivered into the Australian domestic market under a PSP, the rate of duty that applies is the rate in force at the time the goods are delivered. On 3 August 2012 a manufacturer delivers diesel under its PSP. The diesel is classified to subitem 10.10 of the Excise tariff. The rate of duty that applies is the rate in force on 3 August 2012 - $0.38143 per litre. |
Example 6D When goods are delivered into the Australian domestic market under a prepayment arangement, the rate that applies is the rate in force at the time payment is made. On 25 June 2012 a manufacturer that does not hold a PSP prepays duty for a delivery of LPG. The LPG is delivered on 3 July 2012. The LPG is classified to subitem 10.19A of the Excise tariff. The rate of duty that applies is the rate in force on 25 June 2012 - $0.025 per litre not the rate in force when the LPG was delivered ($0.05 per litre). |
The amount of duty payable on the total quantity of LPG delivered is then calculated by multiplying the quantity of excisable fuel products by the applicable rate of duty. |
The rates of duty for most fuel products are currently fixed and are not indexed in accordance with increases in the CPI in the same way as alcohol and tobacco. To change the rate would require amending the Excise Tariff Act. An excise tariff proposal could serve to change the rate, but would require subsequent ratification by Parliament. The rate of duty for LPG, LNG and CNG is legislated to increase on 1 July each year until 2015, when the final rate of duty for these goods will be applied. |
Example 6E 10,000 litres of diesel are delivered into the Australian domestic market on 10 February 2012. The diesel is classified to subitem 10.10 of the Excise tariff and has a duty rate of $0.38143 per litre. Therefore, the duty payable is 10,000 litres x $0.38143 = $3,814.30 |
(iv) Calculating total duty payable
Duty payments are notified to us by including details on your excise return. Excisable fuel products classified to different items or subitems of the Excise tariff must be shown separately on your excise return on what are referred to as lines.Example 6F My Fuel Sales needs to report deliveries for the period ended 10 August 2012. On their excise return, My Fuel Sales reports their deliveries and duty liability as: | |||||
Line | Tariff item | Quantity | Units | Duty rate | Excise amount |
1 | 10.5 | 100,000 | Ltr | $0.38143 | $38,143.00 |
2 | 15.3 | 15,000 | Kg | $0.05449 | $817.35 |
TOTAL | $38,960.35 |
What happens if the rate changes during my settlement period?
If the rates of duty change within your settlement period, you may lodge two excise returns or, alternatively, include separate lines for the same product on one return; that is:- one return or line for goods delivered under the old rates, and
- one return or line for goods delivered under the new rates.
How can the rate change?
The applicable rate of excise duty can also be affected by:- changes to the Excise Tariff Act (including tariff proposals), or
- quotas.
Tariff proposals Tariff proposals are a means of changing the Excise Tariff (rates can be adjusted up or down; products can be added or removed). There are specific provisions in the Excise Act that provide for tariff proposals when Parliament is not sitting. Effectively changes to the Excise Tariff can be notified in the Parliament or, if the Parliament is not sitting, by notice in the Gazette. The tariff proposal is required to be validated by an Act within12 months giving retrospective effect to the date of the proposal. You cannot commence proceedings against us for any action taken to collect the amount set by the tariff proposal during the periods specified in section 114 of the Excise Act.[114] Effectively this means you need to pay in line with a tariff proposal. Any increases in rates or introduction of new products through a tariff proposal technically does not impose excise but we will protect the revenue by collecting amounts in line with the proposal. If an amending Act validating the changes outlined within the tariff proposal is not passed within the prescribed periods, then any additional amounts will be refunded. |
If you have a periodic settlement permission and you have exceeded your quota then the PSP stops being the authority for you to deliver goods during the declared period.[119] This means you will need to prepay the duty on any further deliveries into the Australian domestic market during the declared period. |
For more information about our role in determining and applying quotas refer to Practice Statement Law Administration 2012/3: The ATO role in determining and applying quotas under the Excise Act 1901 |
6.3.6 WHAT DO I DO IF I HAVE A DISPUTE AS TO THE DUTY?
If you dispute:[120]- the amount of duty
- the rate of duty, or
- the liability of goods to duty (for example, whether the goods are excisable)
- relates to the amount or rate of duty; or
- the liability of the goods to duty; and
- the matter of the objection is also in dispute[120A].
Example 6G A licensed manufacturer anticipates manufacturing a new type of excisable good. They seek a private ruling as to the amount of duty that would be payable on the good. They do not accept the amount advised by us in a private ruling and they lodge an objection. Subsequently, they commence manufacture of the excisable goods. They pay the amount of duty that we claimed was payable in the private ruling, and commence an action against us under section 154 of the Excise Act. Their ability to commence an action under section 154 is limited to matters that are not covered under the objection to the private ruling. |
For more information on private rulings see section 8.5.1 - Private Rulings |
These disputes do not apply to changes brought about by a tariff proposal. |
For more information on tariff proposals see section 6.3.5 - How do I work out the amount of duty to pay? |
6.3.7 DO I HAVE TO ACCOUNT FOR EXCISABLE FUEL PRODUCTS?
Where you have or had possession, custody or control of any excisable fuel products[121] (subject to excise control), you have to be able to satisfactorily account for them. If we ask you to account for excisable fuel products, and you cannot satisfactorily do so, then you may be required to pay an amount equal to the duty. If we require this payment you will be given a written demand. The amount you are required to pay is calculated using the rate of duty in force on the day the demand is made. When requested to account for excisable fuel products you must be able to show that:- the goods are still at your premises
- duty has been paid
- duty was not payable (for example, where a full remission applied), or
- the goods have otherwise been dealt with in accordance with the excise law (for example, moved under a movement permission or included on an excise return at a concessional rate).
- given away for promotional purposes[122]
- stolen from licensed premises,[123]or
- delivered into the Australian domestic market under the mistaken belief that they were not excisable.[124]
For information about your review rights refer to Chapter 8 - Reviews and objections. |
Example 6H My Petroleum Wholesalers is asked to account for their excisable fuel products. They carry out a stocktake and find there is a surplus of 100,000 litres of ULP and a shortage of 200,000 litres of diesel. We may allow them to offset the surplus and shortage. Therefore, there are 100,000 litres of diesel that have not been accounted for. A demand will be issued for an amount equal to the excise duty payable on the 100,000 litres. My Petroleum Wholesalers corrects its book stock to take up the surplus stock of 100,000 litres of ULP and, when the demand is paid, write off the shortage of 200,000 litres of diesel. |
Example 6I Continuing from example 6H, a couple of months later, My Petroleum Wholesalers decides to conduct another stocktake. They find a surplus of 250,000 litres of heating oil and a shortage of 200,000 litres of fuel oil. They decide to offset the surplus and shortage. Therefore, there are no litres that have not been accounted for but there is a surplus of 50,000 litres. My Petroleum Wholesalers corrects its book stock to take up the surplus stock of 250,000 litres of heating oil and write off the shortage of 200,000 litres of fuel oil. They do not need to notify us as there has been no shortage in the payment of the duty. If a shortfall had occurred they would need to contact us before the offsetting could occur. |
What is the out of period adjustment arrangement?
There are circumstances in which you may make "out of period" adjustments to your excise liability on your excise return without our prior approval. For example, a periodic settlement permission holder who is eligible for refunds or drawbacks or has underpaid duty in a previous settlement period may be able to use the out of period adjustment arrangement to account for the variations within the current settlement period. Adjustments covered include refund claims, drawback claims and underpayments of duty. An out of period adjustment report must be lodged with the relevant excise return. Before you can make adjustments in this manner you must obtain approval from us.For more information about the out of period adjustment system, refer to PS LA 2003/1: Excise Duty - Reporting and accounting for debit and credit adjustments outside the current reporting period. |
What happens if I return fuel products to underbond stock?
Fuel products that have been delivered into the Australian domestic market but returned before the end of the settlement period are not required to be included on the excise return for that period. The product can be returned to underbond stock and treated as though it had never left excise control. The return of fuel to a licensed place in a settlement period after the fuel was delivered, would give rise to a refund or would alternatively be accounted for under an out of period adjustment if we have allowed you to use this arrangement.6.4 PROCEDURES
6.4.1 HOW DO I GET A PERIODIC SETTLEMENT PERMISSION (PSP)?
If you apply for a manufacturer or storage licence, you can use your application form to indicate whether you intend to pay excise duty either periodically or prior to delivery. You do not need to complete a separate PSP application. If you do not have a licence, or you originally chose not to pay excise duty periodically, then you should complete an Application for a continuing movement permission (non-export) (NAT 73712) and forward it to us for assessment. If we approve your PSP, we will notify you in writing within seven days of receiving your request.A PSP is not transferable to another person and remains in force until revoked. |
- refuse to grant a PSP
- impose conditions on a PSP, or
- cancel a PSP.
For information about your review rights refer to Chapter 8 - Reviews and objections. | |
For more information about PSPs, contact us by phoning 1300 137 292. |
6.4.2 WHAT DOES MY PSP INCLUDE?
Your PSP in relation to excisable fuel products will include:- permission to deliver excisable fuel products into the Australian domestic market
- conditions, such as:
- settlement period - the period specified during which goods can be delivered[127]
- the type of goods that may be delivered from each premises,
- quantity limits (if any)
- when you must pay the duty
- how you must pay - permitted methods (e.g. EFT, cheque, at a Post Office)
- when and how to lodge your excise return
- whether nil returns are required,[128] and
- record-keeping requirements
- a schedule listing:
- one or more premises from which deliveries may be made.
Example 6J A PSP specifies a settlement period starting on Saturday and ending on Friday. It states that excise returns must be lodged by 4 pm on the first business day after the end of the settlement period. It also says that the duty payable on deliveries made during the settlement period must be paid at the same time as the excise return is required to be lodged. An excise return must be lodged and the duty paid by 4 pm on the Monday following the end of the settlement period for all goods delivered during the settlement period. When a public holiday falls on a Monday, the excise return is due for lodgement and duty is to be paid by 4 pm on Tuesday, the next business day. |
6.4.3 WHAT MUST I DO TO DELIVER FUEL PRODUCTS INTO THE AUSTRALIAN DOMESTIC MARKET?
Delivery under periodic settlement permission
If we provide you with a PSP, you must take the following steps to deliver excisable fuel products into the Australian domestic market:- deliver the fuel products into the Australian domestic market: (where delivered in accordance with the permission the products are now no longer subject to excise control)
- complete and submit your excise return in accordance with the timeframes in the permission, and
- pay the duty to us in accordance with the timeframes in the permission.
Delivery after prepaying the excise duty
If you do not have a PSP, you must take the following steps to deliver excisable fuel products into the Australian domestic market:- complete and submit your excise return
- pay the duty to us
- obtain a Delivery authority from us, and
- deliver the fuel products into the Australian domestic market.
6.4.4 HOW DO I LODGE EXCISE RETURNS AND PAY EXCISE DUTY?
To lodge your excise return (NAT 4285):- fax it to us on 1300 131 456, or
- post it to
Excise Returns Processing Unit
PO Box 3007
PENRITH NSW 2740.
- by electronic funds transfer, including direct credit and BPAY
- in person at a Post Office, or
- by mail (cheque or money order), the payment must be received by the day and time stated in your PSP.
If you are required to pay your other tax debts electronically, you must also make your payment for excise duty by electronic funds transfer. | |
We do not accept credit card payments. |
To obtain an excise return (NAT 4285):
| |
For more information about completing your excise return refer to the Excise return instructions (NAT 15436). |
6.4.5 WHAT DO I DO IF I HAVE MADE AN ERROR ON MY EXCISE RETURN?
You may correct errors in your excise return or add new lines by lodging an amending excise return and referencing the number of your original return. If your amendment results in a shortfall in excise duty paid, you must pay the additional duty when you lodge the amending return. If your amendment results in an overpayment of excise duty, you may apply for a refund or treat the amount as a credit and offset it against the duty you are liable to pay in your next excise return. In this situation, time limits may apply in which to lodge your amended return.Time limits apply in making an application for a refund of duty. Generally, an application must be submitted within 14 days of the date on which the excise duty was paid. However, this time may be extended to within 12 months of payment depending on your circumstances. |
To obtain an Amending excise return(NAT 4286):
| |
For more information about completing your Amending excise return refer to the excise return instructions (NAT 15772). |
6.4.6 WHAT DO I DO IF I NEED MORE INFORMATION?
If you need more information on payment of duty contact us as follows:- phone 1300 137 292
- fax (03) 9285 1168, or
- write to us at
Australian Taxation Office
PO Box 3001
PENRITH NSW 2740
6.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO PAYMENT OF DUTY?
The following are the penalties that may apply after conviction for an offence. Move, alter or interfere If you move, alter or interfere with excisable fuel products that are subject to excise control, without permission, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products.[131] Deliver If you deliver excisable fuel products into the Australian domestic market contrary to your permission, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products.[132] Evade If you evade payment of any duty which is payable, the maximum penalty is 5 times the amount of duty on the excisable fuel products, or where a court cannot determine the amount of that duty the penalty is a maximum of 500 penalty units .[133] False or misleading statements If you make a false or misleading statement, or an omission from a statement in respect of duty payable on particular goods, to us, a penalty not exceeding the sum of 50 penalty units and twice the amount of duty payable on those goods.[134]6.6 TERMS USED
Deliver into the Australian domestic market[135] 'Deliver into the Australian domestic market' is the term we use in this manual for when excisable fuel products are released into domestic consumption. The term used in the legislation is 'deliver for home consumption'. Normally this will be by delivering the goods away from licensed premises but includes using those goods within the licensed premises (for example using fuel to run equipment in your licensed premises). It does not include goods delivered for export or the movement of goods underbond (see definition below) to another licensed site. The term 'home consumption' is not defined in the Excise Act and there is no definitive case law that looks at the issue in question. However there are several cases where issues closely related to it are considered.[136] The conclusion drawn from those cases is that 'home consumption' refers to the destination of goods as being within Australia as opposed to exporting them. Excisable fuel products Excisable goods are goods on which excise duty is imposed. Excise duty is imposed on goods that are manufactured or produced in Australia and listed in the Schedule to the Excise Tariff Act. As these guidelines deal with fuel products, we have used the term excisable fuel products. Excisable fuel products include:- petrol
- diesel
- renewable diesel
- crude petroleum oil
- condensate
- heating oil
- kerosene
- fuel ethanol
- biodiesel
- compressed natural gas (CNG)
- liquefied natural gas (LNG), and
- liquefied petroleum gas (LPG).
- the volume of excisable fuel products that you have delivered into the Australian domestic market during the period designated on your PSP, or
- the volume of excisable fuel products that you wish to deliver into the Australian domestic market following approval.
For more information about remissions see Chapter 7 - Remissions, refunds, drawbacks and exemptions. |
6.7 LEGISLATION (quick reference guide)
In this chapter we have referred to the following legislation:6.7.1 Excise Act 1901
Section 24 - Excisable goods and goods liable to duties of Customs may be used in manufacturing excisable goods Section 58 - Entry for home consumption etc. Section 59 - Payment of duty Section 59A - Declared period quotas - effect on rates of Excise duty Section 60 - Persons to keep excisable goods safely etc. Section 61 - Control of excisable goods Section 61C - Permission to deliver certain goods for home consumption without entry Section 114 - Time for commencing action Section 120 - Offences Section 154 - Deposit of duty Section 155 - Limited dispute rights because of objection against private ruling Section 162C - Review of decisions6.7.2 Excise Tariff Act 1921
Section 5 - Duties of excise The Schedule6.7.3 Excise Regulations 1925
Regulation 15 - Permission to deliver certain goods for home consumption without entry6.7.4 Crimes Act 1914
Section 4AA - Penalty units6.7.5 Income Tax Assessment Act 1997
Section 328-110 - Meaning of small business entity6.7.6 Taxation Administration Act 1953
Section 359-60 - Objections, review and appeals relating to private rulings07 REMISSIONS, REFUNDS, DRAWBACKS & EXEMPTIONS
OUR COMMITMENT TO YOU The information in this publication is current at August 2012. This publication is an expression of the Commissioner's opinion on the operation of fuel excise legislation. This publication is not legally or administratively binding on the Commissioner and is not a 'public ruling' for the purposes of Division 358 of Schedule 1 to the Taxation Administration Act 1953. If you feel this publication does not fully cover your circumstances, please seek help from the Tax Office or a professional adviser. Since we regularly revise our publications to take account of any changes to the law, you should make sure this edition is the latest. The easiest way to do this is by checking for a more recent version on our website at www.ato.gov.au |
7.3.5 WHEN ARE EXCISABLE FUEL PRODUCTS EXEMPT FROM EXCISE DUTY? |
7.1 PURPOSE
This chapter deals with:- when you can apply for a remission, refund or drawback
- what happens if you are overpaid a refund or drawback
- when fuel products are exempt from excise duty
- how to apply for a remission, refund or drawback, and
- penalties that can apply to offences in relation to remissions, refunds, drawbacks and exemptions.
7.2 INTRODUCTION
A remission of excise duty extinguishes in full or part, the liability for duty that was imposed at the point of manufacture. A refund is the repayment of duty that has already been paid. A drawback is a repayment of duty already paid. It is similar to a refund, but applies where duty-paid goods are exported. In some circumstances the duty you pay on goods may be subject to a complete or partial refund or drawback.[138]7.3 POLICY AND PRACTICE
7.3.1 WHEN CAN I APPLY FOR A REMISSION OF EXCISE DUTY?
You can apply for a remission of excise duty payable on your excisable fuel products if any of the following circumstances apply while the goods are subject to excise control: The fuel products have deteriorated or been damaged, pillaged, lost or destroyed,[139]'Pillaged' means to strip of money or goods by open violence, as in war; plunder.[140] This does not cover simple cases of theft. | |
'Lost' in this context does not simply mean can not be found. For example a tank may spring a leak and it is known that the fuel has drained away. The fuel has been lost and cannot be used by anyone as a fuel. | |
For more information about payment of duty see Chapter 6 - Payment of duty. |
Example 7A Fuel which is under bond is accidentally destroyed by fire at a licenced site. The owner applies for a remission of duty on the destroyed fuel. If approved, this would extinguish the duty liability. |
Example 7B A manufacturer receives an order from a diplomatic mission for fuel, for official use. The manufacturer delivers the fuel, into the Australian domestic market (to the diplomatic mission), under the terms of their PSP. (The terms of the PSP may require the manufacturer to submit an Excise remission (NAT 4289) to us, after delivery of the fuel.) |
7.3.1.1 REMISSION OF EXCISE DUTY ON LPG AND LNG
A remission of duty is available where you are a licensed person or a holder of a periodic settlement permission and you use LPG or LNG for purposes other than in an internal combustion engine in either a motor vehicle or vessel.[143A] A remission of duty is also available where you are a licensed person or the holder of a periodic settlement permission and you deliver LPG or LNG that is not for use, or intended for use, in an internal combustion engine in either a motor vehicle or vessel. The remission applies at the time the LPG or LNG is delivered.[143B] For the period 1 December 2011 to 30 June 2012 the remission for non-transport LNG and LPG was a full remission of duty. From 1 July 2012 the remission becomes a partial remission as non-transport gaseous fuels became subject to a carbon charge under the Clean Energy Future suite of amendments. A partial remission when applied, results in a reduced amount of duty being payable on the relevant goods, It is the Government's intention that from 1 July 2013 non transport gaseous fuels once again become eligible for a full remission as these clients will begin to account for the emissions associated with gaseous fuels directly under the Carbon Pricing Mechanism, rather than through the excise system. This will be a compulsory scheme thus ensuring all taxpayers currently entitled to a partial remission will once again become entitled to full remissions.For more information about Periodic settlement permissions refer to Chapter 6 - Payment of duty. |
Example 7C: LPG delivered under settlement permission Elizabeth's business is licensed for excise purposes and holds a periodic settlement permission. The business supplies LPG to Kathleen's business for the purposes of heating during the 2012-2013 financial year. Kathleen advises Elizabeth that she will not be using the LPG in the internal combustion engine of a motor vehicle or vessel. This means a partial remission applies and Elizabeth will only have to pay the equivalent carbon charge on the LPG, not the higher transport duty rate. |
Example 7D: LPG delivered no settlement permission applies Susan manufactures LPG. Susan receives an order from Brian who explains that he will not be using the fuel in an internal combustion engine of a motor vehicle or vessel. As Susan does not hold a periodic settlement permission, she must lodge an entry and pay duty before she can deliver the fuel to Brian. Susan applies the partial remission and pays a reduced amount of duty. Once the entry is passed, Susan can deliver the fuel to Brian. This means that Susan must remit excise duty at a rate equivalent to the carbon charge prior to delivering the LPG to Brian. |
Example 7E: LPG delivered for mixed use Aaron manufactures LPG. Aaron delivers LPG to Christopher in a bulk tank for transport and non-transport use. The LPG is excisable. As Aaron supplies the LPG to Christopher for mixed use he cannot apply a remission to the LPG. This means that Aaron must pay excise duty at the transport rate in relation to all the LPG supplied to Christopher. Christopher may be entitled to a fuel tax credit depending on his use of the fuel. |
Example 7F: LPG delivered for transport use by a distributor Huey's business is licensed for excise purposes and supplies LPG to a site specified in a manufacturer licence held by Daisy's Distributors. Daisy holds a movement permission that allows the LPG to move from Huey's licensed site without duty being paid. Daisy distributes fuel to both transport clients and non-transport clients. Where Daisy distributes the LPG to service stations and trucking companies for transport purposes, Daisy will be liable to pay duty on the fuel and no remission will be available. |
For more information about movement permissions refer to Chapter 5 - Movement permissions. |
7.3.1.2 NOTICE REQUIREMENTS FOR LPG DELIVERED UNDER REMISSION
If you hold a manufacturer or storage licence and you supply or sell LPG to which a remission (full or partial) applies at the time of supply or sale you must give notice to your customer.[143C] If you on-sell or on-supply LPG on which a remission applied, and at the time of the on-sale or on-supply a remission continues to apply, you must give notice to your customer that a remission applied to the LPG.[143D] The notice must include the words:'Not to be used, or supplied, for transport use. Penalties apply'. [143E]The statement must appear on the first page of the tax invoice you provide.[143F]
The phrase 'excisable LPG use' means to use LPG in a system for supplying fuel to an internal combustion engine of either a motor vehicle or a vessel, either directly or by filling another tank connected to such an engine. | |
The phrase 'excisable LPG use' does not include the use of LPG for a motor vehicle that is merely designed to move goods with a forklift and is for use primarily off public roads. |
- in, or into, a container with a capacity that does not exceed 210kgs; or
- to a residential premises and the LPG is not supplied, in whole or in part, for the purpose of carrying on an enterprise.[143G]
7.3.1.3 PENALTY OR OFFENCE RELATING TO LPG DELIVERED UNDER REMISSION
You may be subject to a penalty of 1 penalty unit if you do not give the notice when required. The penalty would apply to each instance where the notice was not supplied.[143H] Penalty for using LPG for an excisable LPG use You may be subject to a demand for payment from us if:- LPG is sold or supplied to you; and
- you use the LPG for an excisable LPG use; and
- an LPG remission applied to the LPG at the time of the use.[143I]
- you intentionally sell LPG; and
- you know that, or should reasonably have known as to whether, the LPG will be used for an excisable LPG use, and
- the LPG is used for an excisable LPG use; and
- an LPG remission to the LPG at the time of the use.[143K]
- 500 penalty units; and
- 5 times the amount of duty that would be payable on the LPG at the rate of duty payable on excisable LPG on the day the LGP was used.[143L]
For more information about offences and penalties refer toChapter 9 - Offences. |
7.3.2 WHEN CAN I APPLY FOR A REFUND OF EXCISE DUTY?
You can apply for a refund of excise duty paid on excisable fuel products if the following circumstances apply:- Duty has been paid on fuel that was lost or destroyed.
Duty has been paid on excisable fuel products, however it is later found that, while the goods were subject to excise control (i.e. while they were at the licensed site), they deteriorated or had been damaged, pillaged, lost or destroyed,[144]
Example 7G A licensed entity that does not have a periodic settlement permission enters a quantity of fuel and pays the appropriate duty. Before the goods are delivered from the licensed premises a fire destroys the fuel. As the fuel products were still subject to excise control when they were destroyed, the licence holder can apply for a refund of duty on the fuel products. Upon receipt of this application and satisfactory evidence of the destruction of the fuel, the refund will be paid. - Duty-paid fuel products, while the goods are subject to excise control, are not worth the amount of excise duty paid.[145]
- Duty has been paid through manifest error of fact or patent misconception of the law.[146]
These circumstance applies to an error that is evident, obvious or apparent and also in situations where duty has been paid for goods entering the Australian domestic market that are not in fact excisable. In both cases a refund of the duty paid would be payable. Example 7H The system used by an entity to record deliveries into the Australian domestic market and calculate their duty liability on a weekly basis incorrectly identifies a sale of gasoline for aviation use as tariff item 10.6 and pays excise duty at a rate of $0.38143 per litre rather than the applicable rate of $0.08616. The entity identifies the error after the end of the settlement period. It is eligible to apply for a refund for the difference between the duty paid and the duty that was properly payable. - Duty-paid goods have been taken up as ship's stores or aircraft's stores.[147] Ship's stores on overseas ships and aircraft's stores on international flights are not subject to excise duty. Where duty has been paid and the excisable fuel products are subsequently re-directed for use on ships or aircraft travelling overseas (for example bunker fuel), this refund circumstance may apply. This circumstance does not apply where a fuel tax credit is applicable.
- Under a directive by a Minister of State,[148] duty-paid goods are withdrawn from circulation on grounds of public health or safety and returned to the manufacturer.[149]
- Petrol that is returned to a manufacturer or to a warehouse.[150]
'Petrol' does not only mean gasoline. It also includes any goods classified to item 10 or 15 of the excise tariff, other than goods that have been used.[151] As gaseous fuels are classified to subitems 10.19A, 10.19B and 10.19C, they are captured by the definition of 'petrol'.
The circumstance applies to petrol that is returned to a licensed petroleum terminal. Duty may be refunded when the petrol returns to underbond stock holdings. It does not have to be returned to the original manufacturer.
Returns can occur for a number of reasons, including:
- contamination
- over delivery, or
- vapour recovery. This relates to vapour that is pumped out of a tank at a service station and captured within the tanks on the delivery truck when fuel is delivered. The vapour is extracted from the tanker back at the licensed premises and is converted back to a liquid form and will eventually form part of another delivery.
- Recycled hydraulic oil, brake fluid, transmission oil, transformer oil or heat transfer oil (classified to Excise Tariff Act subitem 15.2), for which no benefit is payable under the Product Stewardship (Oil) Regulations 2000, that has been used for the same purpose for which it was used before being recycled.[152]
- Duty has been paid on excisable fuel products and they are sold to a diplomatic or consular mission.[153]
Time limits apply in making an application for a refund of duty. Generally, an application must be submitted within 14 days of the date on which the excise duty |
7.3.3 WHEN CAN I APPLY FOR A DRAWBACK OF EXCISE DUTY?
You can apply for a drawback if you export fuel products that have had excise duty paid on them.[154] We will only pay a drawback if:[155]- prior to the exportation, you advise us that you intend to claim a drawback (We can exempt you from this requirement, in writing, on all claims for drawback. Alternatively, we can decide to pay a particular claim despite the fact you did not apply prior to exportation.[156])
- before exportation of the excisable fuel products on which duty has been paid, the goods are available for inspection by us,
- you have not claimed a refund of excise duty in relation to the exported excisable fuel products
- the excisable fuel products will not be returned to Australia after they have been exported
- you keep records showing:
- that duty was paid on the fuel products (for example invoice), and
- the fuel products were exported (for example, an export declaration number or bill of lading)
- you lodge a drawback claim in the approved form no later than 12 months after the fuel products were exported, and
- the amount of the claim is at least $50.
7.3.4 WHAT HAPPENS IF I AM OVERPAID A REFUND OR DRAWBACK?
If we overpay you by way of a refund or drawback then you must pay the overpaid amount back. We can demand that you pay back the amount and if you do not repay the amount within the time we specify in the demand we can recover the amount through the courts as a debt due to the Commonwealth.[158]7.3.5 WHEN IS EXCISE DUTY NOT PAYABLE ON EXCISABLE GOODS?
Excise duty is not payable on excisable goods if they are:- exported
- sold for use as ship's or aircraft's stores[159]
- with our approval, delivered as small samples,[160] or
- subject to full remission without application.[161]
What are ship's and aircraft's stores?
Ship's and aircraft's stores are goods for the use of passengers or crew on international journeys or for the service of ships or aircraft on international journeys. If you supply ship's or aircraft's stores underbond, you must obtain a movement permission to move the goods from the licensed premises to the place of export.Can I deliver samples without payment of duty?
Yes, you may be able to deliver small samples without payment of duty and without entry. You must apply to us for approval and your application must:- be in writing
- specify who the sample is for
- specify the quantity for approval, and
- specify the purpose of the sample.
You do not include approved samples in your excise return; however, you must keep records of any samples you deliver. |
- faxing to (03) 9285 1168
- posting to
Australian Taxation Office
PO Box 3001
PENRITH NSW 2740
When are excisable fuel products subject to remission without application?
Excisable fuel products, to which items 10 and 15 of the excise tariff apply, are subject to full remission without application when they are for official use but not for trade by:[162]- the Governor-General or any member of the Governor-General's family
- State Governors or any member of a State Governor's family
- the Australian American Foundation (Australian-American Fulbright Commission)
- the ANZAC Agency for the Pacific Region of the Commonwealth War Graves Commission, and
- the Government of another country, under an agreement between that Government and the Australian Government.
If you are not certain whether someone falls into one of these categories, you should contact us by phone on 1300 137 292. |
For more information of how the remission applied refer to Section 7.3.1.1 Remission of Excise Duty on LPG and LNG above. | |
You do not have to apply for a remission for LPG and LNG under these circumstances and, if a full remission applies, you do not have to include these products on your excise return. |
7.3.5.1 WHEN IS CNG, LPG and LNG EXEMPT FROM EXCISE DUTY?
Gaseous fuels are specifically exempt from excise duty in the following circumstances.CNG
CNG is exempt from duty if it was compressed:[162A]- for use other than as a fuel for a motor vehicle; or
- other than in the course of carrying on an enterprise; or
- for use as a fuel for a motor vehicle designed merely to move goods with a forklift and for use primarily off public roads; or
- at a residential premises; and
- the rate at which the gas was compressed at those premises is not more than 10 kilograms of compressed natural gas per hour; and
- the gas is not sold or otherwise supplied in the course of carrying on an enterprise.
The phrase 'in the course of carrying on an enterprise' has the same meaning that it has in the A New Tax System (Goods and Services Tax) Act 1999. | |
'Residential premises' has the same meaning that it has in the A New Tax System (Goods and Services Tax) Act 1999. |
LPG and LNG
LPG and LNG are exempt from duty if you are a licensed manufacturer and you use the fuel at the premises specified in the licence in the process of manufacturing:- petroleum condensate or stabilised crude petroleum oil; or
- liquefied petroleum gas, liquefied natural gas or other hydrocarbons.[162B]
7.4 PROCEDURES
7.4.1 HOW DO I APPLY FOR A REMISSION OR REFUND?
An application for a remission (where required) or refund must be submitted in writing. Records to substantiate your claims must be maintained and produced when requested.[163] For refund circumstance 1, 2, 3 or 4, in section 7.3.2 above, your application must be submitted within 14 days of the date on which the excise duty was paid. However, this time may be extended to within 12 months of payment depending on your circumstances. [164] To ensure the excisable fuel products do not find their way into the Australian domestic market we may wish to inspect or supervise the disposal of the goods. If underbond goods must be destroyed off site, you must apply for a movement permission to move them from the licensed premises to the place of destruction.Unless fuel products have been accidentally destroyed, you should contact us before moving or destroying any that are subject to remission or refund. We will provide you with direction and advise if the goods are to be inspected or the destruction supervised. | |
For more information about movement permissions refer to Chapter 5 - Movement permissions. |
To apply for a remission, send us a completed Excise remission (NAT 4289). You can use the Excise remission instructions (NAT 15769) to help you complete this form. | |
To apply for a refund, send us a completed Excise refund (NAT 4288). You can use the Excise refund instructions (NAT 15771) to help you complete this form. Applications can also be made on company letterhead as long as all the relevant information is provided. |
For more information about your review rights refer to Chapter 8 - Reviews and objections. |
7.4.2 HOW DO I APPLY FOR A DRAWBACK?
To apply for a drawback of duty, send us a completed Excise drawback (NAT 4287) or an application on your business letterhead. You can use the Excise drawback instructions (NAT 15688) to help you complete NAT 4287. Your drawback application must be received not later than 12 months after the day on which the goods were exported. If we refuse to pay your drawback and you are not satisfied with our decision you can request a review of our decision by lodging an objection within 60 days.For more information about your review rights refer to Chapter 8 - Reviews and objections. |
7.4.3 WHAT DO I DO IF I NEED MORE INFORMATION?
If you need more information on remissions, refunds, drawbacks and exemptions contact us as follows:- phone 1300 137 292
- fax (03) 9285 1168, or
- write to us at
Australian Taxation Office
PO Box 3001
PENRITH NSW 2740
7.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO REMISSIONS, REFUNDS, DRAWBACKS AND EXEMPTIONS?
The following are the penalties that may apply after conviction for an offence. Evade If you evade payment of any duty which is payable, the maximum penalty is 5 times the amount of duty on the excisable fuel products or where a court cannot determine the amount of that duty the penalty is a maximum of 500 units.[165] False or misleading statements If you make a false or misleading statement, or an omission from a statement in respect of duty payable on particular goods, to us, a penalty not exceeding the sum of 50 penalty units and twice the amount of duty payable on those goods.[166]7.6 TERMS USED
Excisable fuel products Excisable goods are goods on which excise duty is imposed. Excise duty is imposed on goods that are manufactured or produced in Australia and listed in the Schedule to the Excise Tariff Act. As these guidelines deal with fuel products, we have used the term excisable fuel products. Excisable fuel products include:- petrol
- diesel
- renewable diesel
- crude petroleum oil
- condensate
- heating oil
- kerosene
- fuel ethanol
- biodiesel
- compressed natural gas (CNG)
- liquefied natural gas (LNG); and
- liquefied petroleum gas (LPG).
- the volume of excisable fuel products that you have delivered into the Australian domestic market during the period designated on your PSP, or
- the volume of excisable fuel products that you wish to deliver into the Australian domestic market following approval.
7.7 LEGISLATION (quick reference guide)
In this chapter we have referred to the following legislation:7.7.1 Excise Act 1901
Subsection 4(1) - Definitions Section 24 - Excisable goods and goods liable to duties of Customs may be used in manufacturing excisable goods Section 58 - Entry for home consumption etc. Section 61A - Permission to remove goods that are subject to CEO's control Section 64 - Delivery of samples free of duty Section 77HA - Compressed natural gas that is exempt from excise duty Section 77HB - Liquefied petroleum gas and liquefied natural gas that is exempt from excise duty Section 77L - Notice requirements for sales or supplies of LPG to which an LPG remission applies Section 77M - Penalty for using LPG for excisable LPG use Section 78 - Remissions, rebates and refunds Section 79 - Drawbacks Section 80 - Recovery of overpayments of refunds, rebates, and drawbacks Section 117BA -Unlawfully selling LPG that is used for an excisable LPG use Section 120 - Offences Section 160A - Ship's stores and aircraft's stores7.7.2 Excise Regulations 1925
Regulation 49AAA - Notice requirements for sales or supplies of LPG to which LPG remission applies - content Regulation 44AB - Circumstances in which notice for sales or supplies of LPG to which LPG remission applies not required Regulation 50 - Circumstances under which refunds, rebates and remissions are made Regulation 50A - Other circumstances under which refunds, rebates and remissions are made Regulation 51 - Requirements for remission, rebate or refund Regulation 52 - Application for remission, rebate or refund Regulation 53 - Period for making of application Regulation 76 - Drawback of excise duty on goods Regulation 78A - Conditions relating to payment of drawback of duty Regulation 78B - Amount of claim for drawback of excise duty Schedule 1 - Prescribed circumstances (regulation 50A)7.7.3 Excise Tariff Act 1921
The Schedule7.7.4 Crimes Act 1914
Section 4AA - Penalty units08 REVIEWS & OBJECTIONS
OUR COMMITMENT TO YOU The information in this publication is current at August 2012. This publication is an expression of the Commissioner's opinion on the operation of fuel excise legislation. This publication is not legally or administratively binding on the Commissioner and is not a 'public ruling' for the purposes of Division 358 of Schedule 1 to the Taxation Administration Act 1953. If you feel this publication does not fully cover your circumstances, please seek help from the Tax Office or a professional adviser. Since we regularly revise our publications to take account of any changes to the law, you should make sure this edition is the latest. The easiest way to do this is by checking for a more recent version on our website at www.ato.gov.au |
8.1 PURPOSE
This chapter deals with:- the types of review you can ask for
- what decisions you can object to
- when you can seek an external review
- how to request an informal review
- how to lodge an objection, and
- how to request an external review.
8.2 INTRODUCTION
We will provide you with a clear explanation of any decision we make about your excise affairs. If you need more information about our decisions, contact us using the details we provide when we advise you of our decision. If you're not satisfied with a decision we've made, you can ask for it to be reviewed by: Where there is more than one review option, we will explain how these differ. For example, some reviews look at questions of law and others involve checking that we followed the correct process in reaching our decision. Which review option is best will depend on your situation.8.3 POLICY AND PRACTICE
8.3.1 WHAT ARE INFORMAL REVIEWS?
Under the Taxpayers' Charter, you can seek an informal (internal) review where you believe that we have made a mistake, not complied with the law, or interpreted or applied the law incorrectly. Your dissatisfaction with our decision may be treated as an informal review, both prior to or after receiving notification of the decision in writing. An informal review does not waive or defer your rights to object to the decision. However, if you choose to pursue an informal review, awaiting the outcome of the informal review may prejudice your right to object to the decision and, ultimately, your right for external review. For example, the time allowed to lodge an objection may have expired by the time an informal review is finalised.This is particularly crucial if the original decision attracts only a 60-day objection period. |
8.3.2 CAN I OBJECT AGAINST ANY DECISION?
No, you can only lodge an objection against those decisions set out in sections 39Q and 162C of the Excise Act and regulation 247 of the Excise Regulations 1925. These include decisions:- made under the licensing provisions of the Excise Act[171]such as:
- refusal to grant a licence
- imposing and varying conditions on a licence, or
- suspension, cancellation or refusal to renew a licence
- to demand an amount in relation to goods not satisfactorily accounted for,[172]or
- relating to a drawback, refund or remission of duty.[173]
8.3.3 WHEN CAN I SEEK AN EXTERNAL REVIEW?
For decisions in relation to an objection, or where there is no right of objection, you may be able to apply to the Federal Court or Federal Magistrates Court under the Administrative Decisions (Judicial Review) Act 1977 (ADJR Act).8.4 PROCEDURES
8.4.1 HOW DO I REQUEST AN INFORMAL REVIEW?
To request an informal review, use the contact details we provide to contact the person or area of the Tax Office handling your case. The review will be conducted by a tax officer who was not involved in making the original decision. We will advise you of the outcome of our review within 28 days of receiving all the information we need. If we cannot finalise the review within 28 days or we need more information from you, we will contact you within 14 days to obtain the information we need or negotiate an extended reply date.8.4.2 HOW DO I LODGE AN OBJECTION?
You can lodge an objection by completing an objection form or writing your own objection document. Your objection must:- be in writing
- lodged within 60 days after you receive the notice of the decision, and
- set out a full and detailed account of the grounds for the objection.[174]
- by faxing it to 1300 650 128
- by e-mailing it to ExcAdvice@ato.gov.au
- in person, at your nearest Tax Office, or
- by posting it to
Australian Taxation Office
PO Box 3001
PENRITH NSW 2740
- apply to the AAT for a review of the decision, or
- appeal against the decision to the Federal Court.
To obtain a copy of our objection forms and for more information about how to lodge an objection, refer to How to lodge an objection on our website at www.ato.gov.au |
8.4.3 HOW DO I REQUEST AN EXTERNAL REVIEW?
We suggest you obtain legal advice if you are considering using external review options provided by the AAT or Federal Court.8.4.4 WHAT DO I DO IF I NEED MORE INFORMATION?
If you need more information on reviews and objections contact us as follows:- phone 1300 137 292
- fax (03) 9285 1168, or
- write to us at
Australian Taxation Office
PO Box 3001
PENRITH NSW 2740
8.5 PRIVATE RULINGS
A ruling is an expression of our opinion of the way a relevant provision applies or would apply to you in the administration or collection of excise duty. We may, on application by you, make a written ruling on the way we consider a particular provision applies or would apply to you in relation to a stipulated set of facts and in a particular circumstance.[174A]8.5.1 HOW DO I APPLY FOR A PRIVATE RULING?
You, your agent or legal personal representative may apply in the approved form for a private ruling. You, your agent or legal personal representative may also withdraw the application at any time before the private ruling is made. We must confirm the withdrawal in writing.[174B]To obtain a copy of our Private ruling application form and for more information about how to lodge an application, refer to How to apply for a private ruling on our website at www.ato.gov.au |
8.5.2 CAN I RELY ON A PRIVATE RULING?
A private ruling binds us if it applies to you and you act in accordance with it. If you act in accordance with the private ruling and the law turns out to be less favourable to you than the ruling provides, you are protected by the ruling from any adverse consequences.[174C]8.5.3 FOR WHAT PERIOD CAN I RELY ON A PRIVATE RULING?
Unless we specify in the private ruling when it begins and ceases to apply, you may rely on the private ruling from the time it is made.[174D] We may revise a private ruling we issue to you. The revised rules will apply to from the date it is issued or such later time that we specify in the ruling. The original ruling will cease to apply from that time.[174E] If we have issued a public ruling on a particular matter and we issue you with a private ruling which deals with the same matter but in a different way, you may rely on your private ruling. This is only if your private ruling was issued after the public ruling was issued and came into effect.[174F]8.5.4 CAN I OBJECT TO A PRIVATE RULING?
You can object to a private ruling that applies to you if you are dissatisfied with it. However you cannot object against a private ruling if:- the ruling relates to excise duty, or another amount, payable in relation to the goods; and
- we have made a decision about the excise duty, or other amount, payable in relation to those goods; and
- the decision is reviewable.[174G]
Example: 8A A licensed manufacturer anticipates manufacturing a new type of excisable good. They seek a private ruling as to the amount of duty that would be payable on the good. They do not accept the amount advised by us in a private ruling and they lodge an objection. Subsequently, they commenced manufacture of the excisable goods. They pay the amount of duty that we stated in the private ruling was payable, and wish to commence an action against us under section 154 of the Excise Act. They are unable to commence an action under section 154 on the same matters as that currently under review through the objection to the private ruling. If the decision on the private ruling is not yet made, the manufacturer may withdraw the objection to the private ruling and commence an action under section 154 of the Excise Act. |
8.6 LEGISLATION (quick reference guide)
In this chapter we have referred to the following legislation:8.6.1 Excise Act 1901
Section 39Q - Review of decisions Section 61A - Permission to remove goods that are subject to CEO's control Section 154 - Deposit of duty Section 155 - Limited dispute rights because of objection against private ruling Section 162C - Review of decisions8.6.2 Excise Regulations 1925
Regulation 247 - Review of decisions8.6.3 Taxation Administration Act 1953
Section 14ZU - How taxation objections are to be made Part IVC - Taxation objections, reviews and appeals Section 357-60 - When rulings are binding on the Commissioner Section 357-75(1B) - Inconsistent rulings Section 359-5 - Private rulings Section 359-10 - applying for a private ruling Section 359-25 - Time of application of private rulings Section 359-60 - Objections, reviews and appeals relating to private rulings09 OFFENCES
OUR COMMITMENT TO YOU The information in this publication is current at May 2009. This publication is an expression of the Commissioner's opinion on the operation of fuel excise legislation. This publication is not legally or administratively binding on the Commissioner and is not a 'public ruling' for the purposes of Section 105-60 or Division 358 of Schedule 1 to the Taxation Administration Act 1953. The law does not provide for legally binding rulings on fuel excise legislation. If you feel this publication does not fully cover your circumstances, please seek help from the Tax Office or a professional adviser. Since we regularly revise our publications to take account of any changes to the law, you should make sure this edition is the latest. The easiest way to do this is by checking for a more recent version on our website at www.ato.gov.au |
9.1 PURPOSE
This chapter deals with:- offences under the Excise Act
- penalties
- infringement notices, and
- application of the Criminal Code.
9.2 INTRODUCTION
This chapter is a general discussion on offences. It is not meant as legal advice and you are encouraged to seek independent legal advice in relation to your own individual circumstances.
There are a number of acts or omissions under the Excise Act that are offences.
A conviction for an offence may result in a penalty as provided for within the Excise Act. The penalty provided may be in the form of penalty units, a term of imprisonment or an amount of money calculated by a set formula.
9.3 OFFENCES
Certain acts or omissions are offences under the Excise Act for which penalties are prescribed.
For penalties to apply to an offence (except where an infringement notice has been issued), you must first be convicted of the offence in a court of law following prosecution.
Certain offences under the excise legislation are strict liability offences as defined in section 6.1 of the Criminal Code (Schedule to the Criminal Code Act 1995). Essentially, strict liability means that the offence consists of the physical act or omission only. It is not necessary for the court to find that you knowingly committed, or were reckless or negligent in relation to the act or omission.
Some sections of the Excise Act prescribe the following two levels of offence for similar conduct:
a higher penalty applies to an act or omission intentionally or recklessly committed,(i.e. where there is a 'fault element), and
a lower penalty applies to the same act or omission on a strict liability basis, (i.e. where no 'fault' element needs to be proven).
Example 9A
Section 26 of the Excise Act prescribes that licensed manufacturers are to manufacture in accordance with the Act and their licence.
|
9.4 PENALTIES
The Excise Act contains many provisions that include a penalty at the foot of the section or subsection. This means that if you are convicted of an offence against the particular provision then you can receive a penalty not exceeding the penalty mentioned.[175] The penalty listed is thus the maximum penalty but the courts can impose a lesser penalty.Example 9B A person manufactures excisable fuel products without a manufacturer licence. This is a contravention of subsection 25(2) of the Excise Act which says that a person shall not manufacture excisable goods without a manufacturer licence. The penalty at the foot of subsection 25(2) of the Excise act is 100 penalty units. We bring a court action against the person and the court convicts the person. The penalty cannot exceed 100 penalty units but it can be less. |
Where an offence also causes goods to be forfeited,[177] conviction by the courts results in the forfeited goods being condemned.[178] This means they are no longer your property and we can dispose of the goods as we see fit. |
9.5 INFRINGEMENT NOTICES
We may issue an infringement notice[179] as an alternative to prosecution for unlawfully possessing, or unlawfully selling excisable goods.[180] An infringement notice imposes a penalty of 20 penalty units. To issue an infringement notice, we must have a reasonable belief that you have committed the offence. Notices must be issued within 12 months of the commission of the offence.[181] In the event of non-payment, prosecution action may be brought against you. You cannot be prosecuted for the same offence where an infringement notice has been issued unless the infringement notice is withdrawn. We can withdraw an infringement notice and if we do so after you have paid the penalty we must refund that to you.9.6 APPLICATION OF THE CRIMINAL CODE
Chapter 2 of the Criminal Code applies to offences against the Excise Act. However, Parts 2.5 and 2.6, which are in Chapter 2, do not apply.[182] In some courts, Excise prosecutions are able to be treated as criminal matters while in other courts they are treated as civil matters.9.7 TERMS USED
Penalty units A penalty unit is specified in section 4AA of the Crimes Act 1914 and, at the time of writing, is $110.9.8 LEGISLATION (quick reference guide)
In this chapter we have referred to the following legislation:9.8.1 Excise Act 1901
Section 5 - Penalty at foot of sections Section 6B - Application of the Criminal Code Section 25 - Only licensed manufacturers to manufacture excisable goods Section 26 - Licensed manufacturers to manufacture in accordance with Act and licence Section 116 - Forfeiture Section 117 - Unlawful possession of excisable goods Section 117B - Unlawfully selling excisable goods Section 127A - Alternative penalties Section 129A - Purpose and effect of this Part (Part XA - penalty instead of prosecution) Section 129B - When an infringement notice may be issued Section 129C - Matters to be included in an infringement notice Section 129D - Due date for penalty Section 129E - Effect of payment of penalty Section 129F - Withdrawal of infringement notice Section 151 - Conviction to operate as a condemnation9.8.2 Crimes Act 1914
Section 4AA - Penalty units Section 4D - Penalties9.8.3 Criminal Code Act 1995
Section 6.1 - Strict liability Chapter 2 - General principles of criminal responsibility10 FUEL IN THE EXCISE TARIFF
OUR COMMITMENT TO YOU The information in this publication is current at August 2012 This publication is an expression of the Commissioner's opinion on the operation of fuel excise legislation. This publication is not legally or administratively binding on the Commissioner and is not a 'public ruling' for the purposes of Division 358 of Schedule 1 to the Taxation Administration Act 1953. If you feel this publication does not fully cover your circumstances, please seek help from the Tax Office or a professional adviser. Since we regularly revise our publications to take account of any changes to the law, you should make sure this edition is the latest. The easiest way to do this is by checking for a more recent version on our website at www.ato.gov.au |
10.2.1 WHAT IS FUEL IN THE SCHEDULE TO THE EXCISE TARIFF ACT? |
10.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO THE EXCISE TARIFF? |
10.1 PURPOSE
This chapter deals with:- the items in the Schedule to the Excise Tariff Act that apply to fuels (including biofuels and gaseous) and other petroleum products, oils, greases, hydraulic fluids,
- what kinds of goods manufactured or produced in Australia are subject to excise
- the classifications of these products
- the rates of excise that apply
- in what circumstances these classifications and rates apply, and
- penalties that can apply to offences in relation to the Excise Tariff.
10.2 INTRODUCTION
10.2.1 WHAT IS FUEL IN THE SCHEDULE TO THE EXCISE TARIFF ACT?
Fuel is covered by items 10, 15, 20 and 21 (however we are not discussing items 20 or 21 in this guide) of the Schedule to the Excise Tariff Act. All excisable fuel products are classifiable to an item of the Schedule to the Excise Tariff Act, which uses a two-tiered numbering system of items and then subitems. Items in the Schedule to the Excise Tariff Act have a general description (which is also referred to as the preamble) which describes the goods classified to the item. Under this general description are listed specific descriptions (subitems) to include or exclude particular products. For goods to be classified to a subitem, they must first be goods of the kind described in one of the relevant items.Example 10A Bitumen is excluded from item 10 by paragraph (i) of the item 10 of the Schedule to the Excise Tariff Act. Bitumen is therefore not a 'petroleum product not elsewhere included' under subitem 10.28 of the Schedule to the Excise Tariff Act. |
Example 10B Paragraph 10(g) of the Schedule to the Excise Tariff Act refers to blends other than blends covered by subsections 77H(1) or (3) of the Excise Act. Subitem 10.30 of the Schedule to the Excise Tariff Act (which covers all blends other than 3 specific biofuel blends) applies only to blends that can be used as fuel in an internal combustion engine. This further restricts the application of excise to certain blends. |
Using imported products
Imported products come under Customs administration and attract customs duty. Imported fuel products can, in certain circumstances, be used in the manufacture of excisable products. This includes blending. The result of this is the creation of an excise liability and, provided the correct Customs requirements and procedures are followed, the extinguishment of the customs duty liability. You should refer to Customs for the import related requirements if you wish to use imported fuel in the manufacture of excisable goods but you still need an excise manufacturer licence. It is common practice for fuel importers to blend imported fuel within Australia. Blending of one or more types of fuel, with or without other substances, within Australia is excise manufacture if it results in a product classifiable to the Schedule to the Excise Tariff Act.For more information on excise manufacture refer to Chapter 2 - Licensing: Applications. |
Product names and descriptions
Some product names in the Schedule to the Excise Tariff Act are defined in the legislation. The definitions are found in:- section 3 of the Excise Tariff Act (e.g. 'biodiesel')
- the preamble to the Schedule to the Excise Tariff Act ('lubricant/fluid/oil products'), and
- section 4 of the Excise Act
- condensate.
- LPG
- common names for products or product types including 'gasoline', 'diesel', 'white spirit', 'kerosene', 'heating oil', 'transmission oil'
- common names for chemical compounds including 'benzene', 'toluene'
- descriptive expressions used in the legislation, including 'denatured ethanol', 'liquid aromatic hydrocarbons', 'stabilised crude petroleum oil'.
'For use'
A number of item classifications in the Schedule to the Excise Tariff Act are dependent on the intended use of the goods. The expression 'for use' means the intended end-use of the product at the time the goods were delivered from excise control into the Australian domestic market. This is sometimes referred to as 'delivery into home consumption'.Example 10C Examples of 'for use' in the Schedule to the Excise Tariff Act: | |
Subitem 10.6 | Gasoline for use as fuel in aircraft |
Item 15 | Goods...other than (a) goods for use as a fuel... |
Items on your excise return
When you enter a product on your excise return under a classification from the Schedule to the Excise Tariff Act that stipulates a particular use, you must have reasonable grounds for believing the product will be used for that purpose. Where a classification excludes a particular use, you must have reasonable grounds for believing the product will not be used for that purpose. If you deliver goods into the Australian domestic market you need to satisfy yourself that the goods will not be used contrary to the tariff item classification you have entered on your return. You need to keep documentation to substantiate the information you include on your excise return.For more information about keeping records refer to Chapter 3 - Licensing: Assessing applications (see Section 3.4.3 - What records do I need to keep?). |
10.2.2 Rates of duty when the item is measured by volume
Temperature correction of volume
The volume of fuel products is affected by density and temperature (i.e. the volume increases with temperature). In most instances, where rates of duty refer to volume in litres, you should use the standard conversion of a weight measurement to a liquid measurement, which is to take the weight and divide it by the density corrected to 15°Celsius.For more information on measuring the volume of liquid fuels please refer to Excise (Volume of Liquid Fuels - Temperature Correction) Determination 2011 (No. 1). |
Conversion of weight to volume
There are instances when product is invoiced in kilograms and needs to be converted to litres, such as:- to record it in stock records, and
- to include it in your excise return.
The method used to calculate litres of fuel is the standard conversion of a weight measurement to a liquid measurement which is to divide the weight of the fuel product by its density (corrected to 15°C), e.g. 100 kilograms of fuel oil, with a corrected density of 0.94, converts to 106 litres (100 / 0.94 = 106.38). |
10.2.3 Conversion of measurement of LPG
If you have a liability for excise duty on transport LPG which was measured in kilograms, and is not measured using volumetric measurement equipment, you can convert the unit of measurement from kilograms to litres by using the conversion rate contained in the Excise Regulations 1925.[183A] If you hold a periodic settlement permission you may be required to use one of the conversions methods included in the Excise (Volume of LPG - Temperature and Pressure Correction) Determination 2011 (No. 1).For more information on excise manufacture refer to Chapter 6 - Payment of Duty. |
Conversion of unit of measurement in the Excise Regulations
LPG that is measured in kilograms may be converted to litres at the rate of 1 kilogram to 1.885 litres. You may only use this conversion factor when the LPG has not been measured using volumetric measurement equipment. [183B] If you decide to apply a particular unit of measurement for LPG which is used for a particular purpose, you are required to apply that unit of measurement throughout the financial year for all LPG used for that purpose. You may however, seek our permission to use a different unit of measurement during the financial year for that LPG.[183C]The conversion rate is subject to periodic review to ensure it continues to accurately reflect the physical characteristics of LPG supplied in the Australian market. |
Example 10D John's business is licensed for excise purposes. John supplies LPG to wholesale customers who collect the product from John's LPG refinery ('wholesale sales'). In these circumstances, the LPG supplied is measured in tonnes by weighbridge measurement and is not measured using temperature and pressure corrected volumetric measurement equipment. John also separately delivers LPG from his refinery in his own tankers ('tanker deliveries to customers'). In these circumstances, measurement occurs in litres when delivered to clients. John is able to determine duty liability for wholesale sales in kilograms and then convert to litres using the conversion factor. John can measure LPG for duty liability purposes in litres for the tanker deliveries to customers. John is not able to change the measurement unit from kilograms to litres for wholesale sales, or from litres to kilograms for deliveries to customers. If John wishes to change measurement units he can obtain permission from us or wait until the end of the financial year. |
Conversion of unit of measurement in the Excise (Volume of LPG - Temperature and Pressure Correction) Determination 2011 (No. 1)
You can only use a method contained in the Determination if:- you hold a periodic settlement permission (PSP); and
- the LPG which you deliver into the Australian domestic market is for use as a fuel in an internal combustion engine of a motor vehicle or vessel.
The accounting period is the same period you use for income tax purposes which generally is from 1 July to 30 June of the following year. You may use a different period if we have given you approval in writing. |
The Excise (Volume of LPG - Temperature and Pressure Correction) Determination 2011 (No. 1) is available on our website at |
For more information on excise manufacture refer to Chapter 6 - Payment of Duty. |
Method 1 - based on density
The amount of kilograms is converted to litres by either:- the use of a factor based on the measured density of the LPG at ambient temperature corrected to 15o Celsius using the American Society for Testing and Materials (ASTM) Petroleum Measurement Tables for Light Hydrocarbon Liquids - Density range 0.500 to 0.653 Kg/L at 15°C; or
- the use of the conversion factor stipulated in Regulation 49AAC(1) of the Excise Regulations 1925 [183E]
Example 10E If a quantity of transport LPG delivered into the Australian domestic market has been weighed as having 15.682 tonnes, then the volume of the LPG would be determined by applying the conversion factor 1.885 as stipulated in the Excise Regulations 1925 for every kilogram of transport LPG (unless the person elects to measure the density of the quantity of transport LPG and apply a specific conversion factor). Application of the Excise Regulation factor 1.885 would result in a volume of 29,561 litres. Excise duty is then calculated on 29,561. |
Method 2 - based on equilibrium vapour pressure
This method applies the American Petroleum Institute Manual of Petroleum Measurement Standards at Chapter 11.2.2M - Compressibility Factors for Hydrocarbons: 350-637 kg/m 3 Density (15° C) and -46° C to 60° C Metering Temperature. The method corrects the volume of transport LPG that was metered under operating pressure to the corresponding volume at the equilibrium vapour pressure for the metered temperature using the American Society for Testing and Materials (ASTM) Petroleum Measurement Tables for Light Hydrocarbon Liquids - Density Range 0.500 to 0.653 Kg/L at 15° C to correct the volume of the transport LPG to 15° Celsius.Example 10F A quantity of transport LPG is dispensed from an LPG tanker which meters an uncorrected volume of 30,000 litres under a pressure of 3000 kilopascals at a temperature of 27.5° C. During the delivery, the density and equilibrium vapour pressure of the LPG is also measured (at 27.5° C) and shown to be 515 kg/m3 and 510 kilopascals respectively. To determine the corrected volume of LPG delivered, the metered volume would need to be adjusted by the pressure correction factor 1.0121 (as per the API Petroleum Measurement Compressibility Factor Tables for Hydrocarbons: 350-637 kg/m3) to determine the volume at equilibrium vapour pressure and the volume temperature correction factor 0.9675 (as per the ASTM Petroleum Measurement Tables for Light Hydrocarbon Liquids) to determine the volume at 15° C. Application of the relevant factors would result in an adjusted volume of 29,367 litres. Excise duty is then calculated on 29,367 litres. |
Method 3 - based on ambient temperature and operating pressure
Use the measured volume of fuel at ambient temperature and operating pressure.Example 10G Following on from Example 10F, if a person's aggregated clearances of transport LPG are less than 150,000 litres per accounting period, and that person delivers transport LPG into the Australian domestic market using uncorrected volumetric measuring equipment, that person may either apply Method 2 and correct the volume of fuel to 15° Celsius and equilibrium vapour pressure (i.e. 29,367 litres) or use the uncorrected measured volume of fuel at ambient temperature and operating pressure (i.e. 30,000 litres). If the uncorrected measured volume is used, excise duty is then calculated on 30,000 litres. |
10.2.4 Conversion measurement of CNG
If you have a liability to duty for CNG and the quantity of CNG is measured in megajoules you are required to use the conversion rate contained in the Excise Regulation 1925. The conversion rate, as at 1 July 2012, is 1 megojoule of CNG to 0.01893 kilograms of CNG.[183F] The conversion rate is subject to periodic review to ensure it continues to accurately reflect the physical characteristics of CNG supplied in the domestic market.10.3 POLICY AND PRACTICE
10.3.1 WHAT IS CLASSIFIED TO ITEM 10?
Fuel products and some products which may not generally be considered as fuel are classified to item 10 of the Schedule to the Excise Tariff Act. For example, paragraph 10(d) of the Schedule to the Excise Tariff Act refers to 'liquid hydrocarbon products derived through a recycling, manufacturing or other process'.Hydrocarbons are any of a class of compounds containing only hydrogen and carbon atoms in varying ratios, such as methane(CH4); ethylene(C2H4); acetylene(C2H2); and benzene(C6H6) |
- have the characteristics of gasoline, kerosene, diesel, liquefied natural gas, compressed natural gas, , heating oil, mineral turpentine or white spirit,
- have the physical characteristics of 'fuel oil' set out in subsection 3(4) of the Excise Tariff Act,
- have the physical characteristics of liquefied petroleum gas set out in section 4 of the Excise Act or
- be a liquid aromatic hydrocarbon consisting principally of benzene, toluene or xylene or a mixture of them.
Liquid hydrocarbon products may contain minor amounts of other elements and still be classified as a liquid hydrocarbon product. | |
"Liquid" hydrocarbons are those that are liquid when they come into existence as a discrete product. |
- goods that have the physical characteristics of 'biodiesel' set out in section 3 of the Excise Tariff Act 1921; and
- goods that are denatured ethanol for use as a fuel in an internal combustion engine
Example 10H Diesel can be produced from used tyres or waste plastic. Though not derived from petroleum, the diesel is classifiable to subitem 10.10 of the Schedule to the Excise Tariff Act. |
What is not classified to item 10?
Item 10 of the Schedule to the Excise Tariff Act contains a number of exclusions. These apply to:- certain uses of fuel in oil production and refining, including:
- stabilised crude petroleum oil and condensate for use in the recovery, production, pipeline transportation or refining of petroleum, or as refinery feedstock, and
- refined or semi-refined liquid petroleum products for use in refining petroleum at a licensed refinery, apart from use as fuel in internal combustion engines
- goods classified to item 15 of the Schedule to the Excise Tariff Act, and
- waxes and bitumen.
10.3.2 PRODUCTS CLASSIFIED TO SUBITEMS OF ITEM 10
The information below provides some context around items and subitems included in item 10 of the Schedule to the Excise Tariff Act, grouped according to product type.Major road transport fuels
Gasoline - other than for use as a fuel in aircraft
The primary use of gasoline is in spark ignition internal combustion engines. Technology is currently available to produce gasoline from natural gas using the gas to liquids (GTL) method. Gasoline produced in this manner would be classified to subitem 10.5 of the Schedule to the Excise Tariff Act.Subitem | Description of goods | Rate of Duty |
10.5 | Gasoline (other than for use as fuel in aircraft) | $0.38143 per litre |
Diesel
Diesel is primarily used as the fuel for compression ignition internal combustion engines (diesel engines). Diesel is not specifically defined in the Excise Tariff Act, therefore, we look to the physical characteristics, how the products are used and current industry practice to determine whether a particular product is diesel. Recent developments in technology have meant that hydrocarbon fuels can be manufactured from sources other than crude oil or waste oil. Technology now exists that allows fuel to be manufactured from feed-stocks such as waste plastic, used tyres and general household waste or from the hydrogenation of animal fats or vegetable oils. If the fuel produced from these feedstocks can be used to run a diesel engine and its characteristics are generally in line with diesel then it would be classified to subitem 10.10 of the Schedule to the Excise Tariff Act. Renewable diesel is defined in section 4A of the Energy Grants (Cleaner Fuels) Scheme Act 2004 as liquid fuel manufactured by chemically altering vegetable oils or animal fats through a process of hydrogenation that complies with the diesel fuel standard. However, this definition is not directly relevant from an excise perspective. The Schedule to the Excise Tariff Act 1921 merely includes subitem 10.10 which pertains to diesel in general. Renewable diesel would be classified to the Schedule under this subitem.Renewable diesel is not currently produced in Australia and is never produced as a discrete product. It involves adding vegetable oils and animal fats to the feedstock from which diesel is generally produced. |
Subitem | Description of goods | Rate of Duty |
10.10 | Diesel (other than biodiesel) | $0.38143 per litre |
Aviation fuels
The major aviation fuels are:- aviation gasoline (AVGAS), and
- aviation kerosene (also known as aviation turbine fuel, AVTUR or Jet A1).
Replacement rate = $0.03556 per litre + the carbon component rateDuring the period 1 July 2013 to 30 July 2015 the carbon component rate is fixed. Therefore the rate of duty on aviation gasoline and aviation kerosene for the period 1 July 2012 to 30 June 2015 is as follows:
Aviation gasoline - subitem 10.6
Date of effect | CASA levy per litre | Plus carbon component rate per litre[184G] | Replacement rate per litre |
1 July 2012 | *$0.08616 | ||
1 July 2013 | $0.03556 | $0.05313 | $0.08869 |
1 July 2014 | $0.03556 | $0.05588 | $0.09144 |
Aviation kerosene subitem 10.17
Date of effect | CASA levy per litre | Plus carbon component rate per litre[184H] | Replacement rate per litre |
1 July 2012 | *$0.09536 | ||
1 July 2013 | $0.03556 | $0.06279 | $0.09835 |
1 July 2014 | $0.03556 | $0.06604 | $0.1016 |
Biofuels
Bio-fuels are fuels made from renewable and/or organic feedstock. Ethanol and biodiesel are biofuels currently in commercial use in Australia.Fuel ethanol
Denatured ethanol for use as fuel in an internal combustion engine is classified to subitem 10.20 of the Schedule to the Excise Tariff Act. Ethanol is another term for ethyl alcohol.Manufacturing fuel ethanol
If you produce ethanol for any purpose you must hold an excise manufacturer licence. If you produce ethanol for fuel and non-fuel applications, your licence must specify this.For further information on licensing, see Chapter 2 - Licensing: Applications. |
Denaturing
Fuel ethanol is usually denatured by the addition of 1% or more unleaded petrol. However, we will accept other denaturants, provided that they meet the requirements of Excise (Denatured spirits) Determination 2006 (No. 2) which deals specifically with alcoholic beverages. The Explanatory Statement provides information about the background, purpose and operation of this determination.Subitem | Description of goods | Rate of Duty |
10.20 | Denatured ethanol for use as fuel in an internal combustion engine | $0.38143 per litre |
Fuel ethanol blends
Fuel ethanol is usually blended (primarily with petrol) for use as a fuel in spark ignition engines. In other limited cases denatured ethanol can be used in compression ignition engines. Blends of diesel and ethanol are sometimes referred to as 'Diesohol'. In the Schedule to the Excise Tariff Act there are specific subitems for ethanol blends:Subitem | Description of goods | Rate of Duty |
10.7 | Blends of gasoline and ethanol | The amount of duty worked out under section 6G |
10.11 | Blends of diesel and ethanol | The amount of duty worked out under section 6G. |
For further information see discussion on "Calculating duty according to section 6G" of the Excise Tariff Act below. |
Certain blends are exempt of from goods covered by paragraph (g) of item 10 by Excise (Blending exemptions) Determination 2012 (No. 1). |
Biodiesel
Biodiesel is defined in subsection 3(1) of the Excise Tariff Act as: 'fuel manufactured by chemically altering vegetable oils or animal fats (including recycled oils from these sources) to form mono-alkyl esters.' Subitem 10.21 of the Schedule to the Excise Tariff Act applies only to products that meet this definition. Therefore, fuel produced from animal fats or vegetable oils by hydrogenation is not biodiesel for the purposes of the Schedule to the Excise Tariff Act. Fuel made from other feedstocks, such as waste plastics, is also not biodiesel.Subitem | Description of goods | Rate of Duty |
10.21 | Biodiesel | $0.38143 per litre |
Biodiesel manufacture
Biodiesel can be made from the following feedstocks:- new or used vegetable oils (e.g. soybean oil, rapeseed/canola oil, cotton seed and mustard seed oils)
- oils from oil bearing trees (e.g. palm & coconut oil)
- animal fats (e.g. beef tallow), and
- waste cooking oils (e.g. used frying oil, grease trap waste).
- alkali-catalysed transesterification of the feedstock with alcohol
- direct acid-catalysed esterification of the feedstock with alcohol, or
- the conversion of the feedstock to fatty acids and then to alkyl esters with acid catalysis.
For further information on licensing, see Chapter 2 - Licensing: Applications. | |
Biodiesel is excisable whether or not it meets the fuel quality standard for biodiesel developed by the Commonwealth department[185A] responsible for the administration of the Fuel Quality Standards Act 2000. Information on the standard may be obtained from the department.. | |
Biodiesel manufacturers may be eligible to claim the cleaner fuels grant. You must meet the fuel quality standard to be eligible for the cleaner fuels grant. | |
More information on the Cleaner fuels grants scheme is available on our website at www.ato.gov.au and refer to Fuel schemes essentials. |
The exception is provided by Excise (Blending exemptions) Determination 2012 (No. 1). The Explanatory Statement explains the purpose and operation of this determination. |
Example 10I A trucking company buys fuel and stores it in a tank. On some occasions they buy diesel and on other occasions they buy biodiesel. The tank is not completely emptied before being topped up. There is no intention to make a diesel/biodiesel blend. It is impractical to completely empty the fuel from the tank. This circumstance is incidental blending as covered by the determination. It is not excise manufacture. |
Diesel and biodiesel blends
Blends of diesel and biodiesel are covered by subitem 10.12 of the Schedule to the Excise Tariff Act.Subitem | Description of goods | Rate of Duty |
10.12 | Blends of diesel and biodiesel | The amount of duty worked out under section 6G |
For further information see discussion on section 6G of the Excise Tariff Act below. |
Other fuel blends
Fuel blends that do not have their own specific classification are classified to subitem 10.30 of the Schedule to the Excise Tariff Act. For a blend to be classified to this subitem, it must be able to be used as fuel in an internal combustion engine. This is accepted as meaning the blend can be used in an internal combustion engine without causing material damage to an engine within a short period (for example, a day or within 100 kilometres).Subitem | Description of goods | Rate of Duty |
10.30 | Blends of 1 or more of the above goods (with or without other substances) not elsewhere included that can be used as fuel in an internal combustion engine (other than goods covered by section 77J of the Excise Act 1901) | The amount of duty worked out under section 6G |
Example 10J Diesel and base oil can be blended together to produce a mould release agent that is used in brick manufacture. The blend can be used in internal combustion engines and is classified to subitem 10.30 of the Schedule to the Excise Tariff Act. |
A blend which is not a biofuel blend is not classified to subitem 10.30 of the Schedule to the Excise Tariff Act if:
|
Calculating duty according to Section 6G of the Excise Tariff Act
The rate of duty applicable to these specified blends is determined in accordance with the method statement in section 6G of the Excise Tariff Act. This method takes account of any duty already paid on the components of the blend. The method for working out the duty payable on these blends isStep 1 | Add up the amount of duty that would be payable on each constituent of the blend that is classified to item 10 of the Schedule to the Excise Tariff Act 1921 |
Step 2 | Work out the volume, in litres, of any other constituent of the blend (excluding any water added to the manufacture of the blended goods).[189] |
Step 3 | Multiply the result of step 2 by $0.38143. |
Step 4 | Total the results of steps 1 and 3. |
Step 5 | Subtract from the total any duty paid on a constituent of the blended goods that is classified to item 10 or 15 of the Schedule to the Excise Tariff Act 1921 . |
For more information about fuel blends refer to Chapter 11 - Blending. |
Example 10K
Marvin's Fuel manufactures a B10 blend (10% biodiesel / 90% diesel) using 18,000 litres of underbond diesel and 2,000 litres of duty-paid biodiesel.
Marvin's Fuel works out the duty payable on the blend under section 6G as follows:
|
Example 10L
Esther's Fuels manufactures an E10 blend from 18,000 litres of duty-paid gasoline and 2000 litres of duty-paid fuel ethanol.
|
Burner fuels
Kerosene, heating oil and fuel oil[190] are often described as burner fuels because these products are mainly used in burner applications (e.g. as fuel for heating appliances). They are also capable of being used in other applications, for example, as solvents.Subitem | Description of goods | Rate of Duty |
10.15 | Heating oil | $0.38143 per litre |
10.16 | Kerosene (other than for use as fuel in aircraft) | $0.38143 per litre |
10.18 | Fuel oil | $0.38143 per litre |
Crude oil and condensate used as fuel
Condensate, stabilised crude oil and topped crude oil are included in item 10 of the Schedule to the Excise Tariff Act when these products are used directly as fuel. Condensate or stabilised crude oil is excluded from item 10 of the Schedule to the Excise Tariff Act when used:- in the recovery, production, pipeline transportation or refining of crude oil or condensate, or
- as refinery feedstock.
Stabilised crude oil and condensate can attract duty under items 20 and 21 respectively of the Schedule to the Excise Tariff Act and the exclusions above do not apply. [191] |
- liquid petroleum; or
- a substance:
- that is derived from gas associated with oil production; and
- that is liquid at standard temperature and pressure.192
Subitem | Description of goods | Rate of Duty |
10.1 | Petroleum condensate | $0.38143 per litre |
Subitem | Description of goods | Rate of Duty |
10.2 | Stabilised crude petroleum oil | $0.38143 per litre |
Subitem | Description of goods | Rate of Duty |
10.3 | Topped crude petroleum oil | $0.38143 per litre |
Liquefied petroleum gas (LPG)
LPG is defined to include:[192A]- liquid propane; or
- liquid mixture of propane and butane
- liquid mixture of propane and other hydrocarbons that consists mainly of propane; or
- a liquid mixture of propane, butane and other hydrocarbons that consists mainly of propane and butane.
- petroleum condensate or stabilised crude petroleum oil; or
- liquefied petroleum gas, liquefied natural gas or other hydrocarbons. [192C]
For more information about the remission of excise duty on LPG supplied for non-transport use refer to Chapter 7 - Remissions, Refunds, Drawbacks & Exemptions |
Subitem | Description of goods | *Rate of Duty |
10.19A | Liquefied petroleum gas, other than liquefied petroleum gas exempted from excise duty by section 77HB of the Excise Act 1901 | 1 Dec 2011 to 30 June 2012 $0.025 per litre 1 July 2012 to 30 June 2013 $0.050 per litre 1 July 2013 to 30 June 2014 $0.075 per litre 1 July 2014 to 30 June 2015 $0.100 per litre 1 July 2015 - final rate $0.125 per litre |
Liquefied natural gas (LNG)
LNG is produced from natural gas that is cooled to the point that it condenses to a liquid. LNG is typically exported but is also used as a transport fuel, generally in heavy-duty long range road transport. Duty on LNG is imposed at the point of manufacture. Like other excisable goods, excise duty on LNG is calculated at the prevailing rate at the time the fuel is delivered into the Australian domestic market or payment made, which ever is the earlier.[192D] The excise duty rate is expressed as an amount per kilogram. The rates of duty for LNG will increase annually on 1 July each year until 2015 when the final rate will be applied. The applicable rate is determined on the day the LNG is delivered into the Australian domestic market or the duty is paid whichever is the earlier.Subitem | Description of goods | *Rate of Duty |
10.19B | Liquefied natural gas, other than liquefied natural gas exempted from excise duty by section 77HB of the Excise Act 1901 | 1 Dec 2011 to 30 June 2012 $0.0522 per kilogram 1 July 2012 to 30 June 2013 $0.1045 per kilogram 1 July 2013 to 30 June 2014 $0.1567 per kilogram 1 July 2014 to 30 June 2015 $0.209 per kilogram 1 July 2015 - final rate $0.2613 per kilogram |
- prior to 1 July 2012 a full remission of duty is available;
- on and after 1 July 2012 a partial remission of duty is available.
For more information about the remission of excise duty on LPG supplied for non-transport use refer to Chapter 7 - Remissions, Refunds, Drawbacks & Exemptions |
Compressed natural gas (CNG)
CNG is produced by compressing natural gas. CNG is used in some bus fleets, street sweepers and garbage collection vehicles. There is no significant use of CNG in passenger motor vehicles in Australia at this stage. CNG is exempt from duty if it was compressed:- for use other than as a fuel for a motor vehicle; or[192G]
- other than in the course of carrying on an enterprise; or[192H]
- for use as a fuel for a forklift vehicle that is used primarily off public roads; or[192I]
- at a residential premises; and
- the rate at which the gas can be compressed at those premises is not more than 10 kilograms of compressed natural gas per hour (or if specified, the rate specified in the regulations); and
- the gas is not sold or otherwise supplied in the course of carrying on an enterprise.[192J]
The phrase 'in the course of carrying on an enterprise' has the same meaning a when it is used in the A New Tax System (Goods and Services Tax) Act 1999. |
The term 'residential premises' has the same meaning as given in the A New Tax System (Goods and Services Tax) Act 1999. |
Subitem | Description of goods | *Rate of Duty |
10.19C | Compressed natural gas, other than compressed natural gas exempted from excise duty by section 77HB of the Excise Act 1901 | 1 Dec 2011 to 30 June 2012 $0.0522 per kilogram 1 July 2012 to 30 June 2013 $0.1045 per kilogram 1 July 2013 to 30 June 2014 $0.1567 per kilogram 1 July 2014 to 30 June 2015 $0.209 per kilogram 1 July 2015 - final rate $0.2613 per kilogram |
Liquid aromatic hydrocarbons
Some industrial processes, such as coal coking, waste incineration and some plastics production, results i by-products consisting principally of the aromatic hydrocarbons benzene, toluene and xylene, or mixtures of them. These can be used as fuels. Other substances may be present in these products, but these aromatics must be the principal constituents to be classified to subitem 10.25 of the Schedule to the Excise Tariff Act.Subitem | Description of goods | Rate of Duty |
10.25 | Liquid aromatic hydrocarbons consisting principally of benzene, toluene or xylene or mixtures of them | $0.38143 per litre |
Mineral turpentine & white spirit
Mineral turpentine and white spirit are very similar and are predominantly used as solvents.Subitem | Description of goods | Rate of Duty |
10.26 | Mineral turpentine | $0.38143 per litre |
10.27 | White spirit | $0.38143 per litre |
Petroleum products not elsewhere included
Subitem 10.28 of the Schedule to the Excise Tariff Act includes all unblended petroleum products not elsewhere included that fall within the general description of item 10 of the Schedule to the Excise Tariff Act. Products classified to this subitem can be as diverse as lighter fluid, naphtha and recycled waste oil, including waste oil recycled by filtering and dewatering. Recycled waste oil is only classified to this subitem if it cannot be classified elsewhere (e.g. diesel to subitem 10.12 of the Schedule to the Excise Tariff Act; re-refined base oil not for fuel use to subitem 15.2 of the Schedule to the Excise Tariff Act).Subitem | Description of goods | Rate of Duty |
10.28 | Petroleum products (other than blends) not elsewhere included (other than goods covered by section 77J of the Excise Act 1901) | $0.38143 per litre |
For more information about section 77J refer to Chapter 12 - Solvents. | |
Products derived from non-petroleum sources cannot be classified to subitem 10.28 of the Schedule to the Excise Tariff Act. |
10.3.3 PRODUCTS CLASSIFIED TO SUBITEMS OF ITEM 15
Lubricating oils and greases, hydraulic fluids and oils used for heat transfer applications in machinery are classified to item 15 of the Schedule to the Excise Tariff Act, including:- lubricant base oils
- prepared lubricant additives containing carrier oils
- lubricants for engines, gear sets, pumps and bearings
- hydraulic fluids
- brake fluids
- transmission oils
- transformer and heat transfer oils, and
- synthetic equivalents of petroleum-based oil and grease products.
Item | Description of goods |
15 | Goods as follows, other than:
|
- food grade white mineral oil
- polyglycol brake fluids, and
- aromatic process oils
Example 10M | |
An oil recycler produces re-refined base oil which can be manufactured into lubricating oil by the addition of suitable additives but can also be used as fuel. The base oil is delivered for use as a fuel. It does not meet industry standards for diesel or another specified product under item 10 of the Schedule to the Excise Tariff Act. The base oil is not classified to item 15 of the Schedule to the Excise Tariff Act. It is classified to subitem 10.28 of the Schedule to the Excise Tariff Act. Duty is payable at $0.38143 per litre. |
Subitem | Description of goods | Rate of Duty |
15 | Goods as follows, other than: (a)goods for use as a fuel; and (b)exempt oils and hydraulic fluids | |
15.1 | Petroleum-based oils (including lubricant/fluid/oil products) and their synthetic equivalents but not greases | $0.05449 per litre |
15.2 | Petroleum-based oils (including lubricant/fluid/oil products and greases) and their synthetic equivalents, recycled for use as oils (including lubricant/fluid/oil products) but not greases | $0.05449 per litre |
15.3 | Petroleum-based greases and their synthetic equivalents | $0.05449 per kilogram |
15.4 | Petroleum-based oils (including lubricant/fluid/oil products and greases) and their synthetic equivalents, recycled for use as greases | $0.05449 per kilogram |
Synthetic equivalents
A synthetic product is equivalent to a petroleum-based (lubricant/fluid/oil) product where it performs the equivalent function of the petroleum based oil. Factors to consider include indicated use and marketing.Example 10N | |
Synthetic lubricating oil is designed to be used as lubricating oil in an engine. It performs the same function as petroleum based lubricating oil. It is therefore the equivalent of petroleum based lubricating oil. |
For further information, refer to Chapter 8 - Reviews and objections. |
10.4 PROCEDURES
10.4.1 WHAT DO I DO IF I NEED MORE INFORMATION?
If you need more information on fuel in the excise tariff contact us as follows:- phone 1300 137 292
- fax (03) 9285 1168, or
- write to us at
Australian Taxation Office
PO Box 3001
PENRITH NSW 2740
10.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO THE EXCISE TARIFF?
The following are the penalties that may apply after conviction for an offence. Manufacture If you manufacture excisable fuel products without a manufacturer licence, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products.[194] If you manufacture excisable fuel products contrary to the Excise Act or any conditions specified in your licence, the penalty is a maximum of two years in prison or 500 penalty units.[195] If you manufacture excisable fuel products at premises that are not specified in your licence, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products.[196] Move, alter or interfere If you move underbond excisable fuel products without approval, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products.[197] Note: This includes moving underbond excisable fuel products from your premises to any other location or for export. If your movement of underbond excisable fuel products does not comply with the permission to move the underbond excisable fuel products, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products.[198] If you move, alter or interfere with excisable fuel products that are subject to excise control, without permission, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products.[199] Deliver If you deliver excisable fuel products into the Australian domestic market contrary to your permission, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products.[200] Records If you do not keep, retain and produce records in accordance with a direction under section 50 of the Excise Act, the penalty is a maximum of 30 penalty units. Directions If you do not comply with a direction in regard to what parts of the factory can be used for various matters, the penalty is a maximum of 10 penalty units.[201] False or misleading statements If you make a false or misleading statement, or an omission from a statement in respect of duty payable on particular goods, to us, a penalty not exceeding the sum of 50 penalty units and twice the amount of duty payable on those goods.[202] Evade If you evade payment of any duty which is payable, the maximum penalty is 5 times the amount of duty on the excisable fuel products, or where a court cannot determine the amount of that duty the penalty is a maximum of 500 penalty units.[203] Facilities etc. If you do not provide all reasonable facilities for enabling us to exercise our powers under the Excise Act, the penalty is a maximum of 10 penalty units.[204] If you do not provide sufficient lights, correct weights and scales, and all labour necessary for weighing material received into and all excisable fuel products manufactured in your factory, and for taking stock of all material and excisable fuel products contained in your factory, the maximum penalty is 10 penalty units.[205] If we mark or seal excisable fuel products or fasten, lock or seal any plant in your factory and you alter, open, break or erase the mark, seal, fastening or lock, the maximum penalty is 50 penalty units.[206]10.6 TERMS USED
Deliver into the Australian domestic market [207]
'Deliver into the Australian domestic market' is the term we use in this manual for when excisable fuel products are released into domestic consumption. The term used in the legislation is 'deliver for home consumption'. Normally this will be by delivering the goods away from licensed premises but includes using those goods within the licensed premises (for example using fuel to run equipment in your licensed premises). It does not include goods delivered for export or the movement of goods underbond (see definition below) to another licensed site. The term 'home consumption' is not defined in the Excise Act and there is no definitive case law that looks at the issue in question. However there are several cases where issues closely related to it are considered.[208] The conclusion drawn from those cases is that 'home consumption' refers to the destination of goods as being within Australia as opposed to exporting them. Excisable fuel products Excisable goods are goods on which excise duty is imposed. Excise duty is imposed on goods listed in the Schedule to the Excise Tariff Act and that are manufactured or produced in Australia and listed in the Schedule to the Excise Tariff Act. As these guidelines deal with fuel products, we have used the term excisable fuel products. Excisable fuel products include:- petrol
- diesel
- renewable diesel
- stabilised crude petroleum oil
- petroleum condensate
- heating oil
- kerosene
- fuel ethanol
- biodiesel
- compressed natural gas (CNG)
- liquefied natural gas (LNG); and
- liquefied petroleum gas (LPG).
- the volume of excisable fuel products that you have delivered into the Australian domestic market during the period designated on your PSP, or
- the volume of excisable fuel products that you wish to deliver into the Australian domestic market following approval.
10.7 LEGISLATION (quick reference guide)
In this chapter we have referred to the following legislation:10.7.1 Excise Act 1901
Section 4 - Definitions Section 24 - Excisable goods and goods liable to duties of Customs may be used in manufacturing excisable goods Section 25 - Only licensed manufacturers to manufacture excisable goods Section 26 - Licensed manufacturers to manufacture in accordance with Act and licence Section 27 - Licensed manufacturers to manufacture only at licensed premises Section 49 - Facilities to officers Section 50 - Record keeping Section 51 - Collector may give directions Section 52 - Weights and scales Section 58 - Entry for home consumption etc. Section 59 - Payment of duty Section 61 - Control of excisable goods Section 61A - Permission to remove goods that are subject to CEO's control Section 61C - Permission to deliver certain goods for home consumption without entry Section 77H - Blending exemptions Section 77HA - Compressed natural gas that is exempt from excise duty Section 77HB - Liquefied petroleum gas and liquefied natural gas that is exempt from excise duty Section 77J - Goods that are not covered by subitem 10.25, 10.26, 10.27, 10.28 or 10.30 Section 77K - Crude oil and condensate may attract more than one excise duty Section 92 - Seals etc. not to be broken Section 117A - Unlawfully moving excisable goods Section 117B - Unlawfully selling excisable goods Section 120 - Offences10.7.2 Excise Tariff Act 1921
Section 3 - Definitions Section 6FA - changes in rate of duty on gasoline for use as fuel in aircraft Section 6FB - Changes in rate of kerosene for use as a fuel in aircraft Section 6FC - Publication of replacement rates for aircraft fuel Section 6G - Duty payable on blended goods Schedule item 10(j) - - Goods covered by 77HA or 77HB of the Excise Act 190110.7.3 Excise Regulations 1925
Regulation 49AAC - Conversion of measurements of LPG and compressed natural gas10.7.4 Crimes Act 1914
Section 4AA - Penalty units11 BLENDING
OUR COMMITMENT TO YOU The information in this publication is current at August 2012. This publication is an expression of the Commissioner's opinion on the operation of fuel excise legislation. This publication is not legally or administratively binding on the Commissioner and is not a 'public ruling' for the purposes of Division 358 of Schedule 1 to the Taxation Administration Act 1953. If you feel this publication does not fully cover your circumstances, please seek help from the Tax Office or a professional adviser. Since we regularly revise our publications to take account of any changes to the law, you should make sure this edition is the latest. The easiest way to do this is by checking for a more recent version on our website at www.ato.gov.au |
11.1 PURPOSE
This chapter deals with:- what a blended product is
- how it is classified
- the rates of excise that apply, and
- penalties that can apply to offences in relation to blending.
11.2 INTRODUCTION
Fuel is commonly blended with other fuel or other substances to make products suitable for a particular purpose. The excise treatment of blends is quite complex and the correct excise treatment may depend on what components and proportions are in the blend and whether duty paid products are used. The provisions relating to blends are aimed at ensuring the correct amount of revenue is collected and that the application of excise duty on blends and the operation of the Fuel Tax Credit Scheme is appropriate11.3 POLICY AND PRACTICE
11.3.1 WHAT IS BLENDING?
Although the term 'blend' is not defined in the Excise Act or the Excise Tariff Act, section 77G of the Excise Act specifically provides that fuel blending which produces goods covered by paragraph 10(g) in the Schedule to the Excise Tariff Act constitutes the manufacture of those goods. Given that it is taken to be the manufacture of those goods, it follows that the blends are excisable.Some limited exemptions apply (for further information, see the "Exempt Blending" section below) |
Gasoline (petrol) Kerosene Diesel Heating oil Fuel oil [as defined in subsection 3(1)] Biodiesel Fuel ethanol Liquid hydrocarbon products (e.g. toluene, benzene or xylene) Mineral turpentine White spirit Petroleum condensate Stabilised crude petroleum oil Topped crude petroleum oil LPG LNG
Example 11A
Examples of blended fuel:
|
Example 11B A manufacturer produces white spirit by means of blending various petroleum products. The product, though a blend of other products that fall within item 10 in the Schedule to the Excise Tariff Act, is classified as white spirit, subitem 10.27 in the Schedule to the Excise Tariff Act. |
11.3.2 WHAT IS EXEMPT BLENDING?
Exempt blending occurs where the blending process results in a product that is classifiable to paragraph 10(g) of the Schedule to the Excise Tariff but the Excise Act or related determinations specify that this is not an act of excise manufacture. In some cases the exemptions relate to the blend and the constituents of the blend while in other cases the exemptions arise due to the circumstances in which the blending occurs. The following flowchart sets out the process for deciding whether production of a particular blend is excise manufacture.
The logic behind this process is:-
- Does the blend fall under section 77G of the Excise Act?
The answer will be yes if
- The blend components are classifiable to Items 10, 15, 20 or 21 of the Excise Tariff; and
- The blend is covered by paragraph 10(g) of the Excise Tariff.
- Are the circumstances covered by a determination made under sections 77H(3) and(4) ? The answer will be "yes" if the product meets any of the tests described in (a) to (f) below.
- Is the blend a blend of the same 'relevant fuel', where no components of the blend were that is not subject to remission (either in full or in part), and, excise or customs duty has been paid on the fuel which is blended? If the answer is "yes" then the blended product is not covered by paragraph 10(g) of the Excise Act. Therefore the blending does not constitute excise manufacture.
- Is the blend a blend of LPG or a blend of LNG and for each amount of the blend either:
- a remission of excise or customs duty (in whole or in part) applied because the fuel was not used, or intended for use, in an internal combustion engine in either a motor vehicle or a vessel; or
- the amount is not subject to excise or customs duty because it was manufactured, produced or imported before 1 December 2011?
- Is the blend of components that have been duty paid at the same rate or is the blend covered by a determination under section 95-5 of the Fuel Tax Act? The answer will be "yes" if only duty paid products with the same duty rate have been used or the blend is covered by a determination under section 95-5.
- Is a constituent of the blend denatured ethanol or biodiesel; or is any constituent a taxable fuel for which an entity has been entitled to a fuel tax credit? The answer will be "yes" if either biofuels have been used in the blend or an entity has been entitled to a fuel tax credit in respect of any component of the blend (this generally applies to fuel that has been acquired in packaged form meeting certain criteria or heating oil acquired for domestic purposes for which the supplier received a fuel tax credit).
- Oil and gasoline are blended for use as two stroke gasoline where duty has been paid both constituents;
- An incidental blend occurs where the constituents are placed in a tank containing remnants of those fuels listed above or another substance;
- Diesel or biodiesel on which duty has been paid is blended with stabilised crude petroleum oil;
- Fuel on which duty has been paid is blended with a dye;
- Fuel on which duty has been paid is blended with prepared additives that enhance the performance of an internal combustion engine or assist in its maintenance (the prepared additives cannot be methanol or other fuel) and the blend is packaged into containers of not more than 10 litres capacity;
- Fuel on which duty has been paid is blended with one or more of the following additives, being additives that are packaged into containers of at least 10 litres capacity:
Cougar Oils Turbojet Multi-functional Fuel Treatment; Dipetane; Pro-Ma DT5 Plus Concentrated Diesel Treatment; Pro-Ma DT5 Plus Concentrated Petrol Treatment; Wynn's EDT Enviro Diesel Treatment.
- Fuel that is the product of blending amounts of LPG without other substances if the following apply:
- the excise or excise equivalent customs duty payable on the LPG has been paid; and
- the blending occurs:
- in a container capable of holding no more than 210 kilograms of LPG; or
- in a tank at a residential premises and the blend is not for use in carrying on an enterprise; or
- in a tank that is for use in a system for supplying LPG to at least 2 residential premises (whether or not the system also supplies fuel to other premises which are not residential premises)
- the tank where the blending occurred is not used in a system for supplying LPG to an engine of a motor vehicle (other than a forklift) or a vessel, either directly or by filling another tank connected to the engine.
Example 11C A fuel retailer mixes duty-paid diesel with duty-paid kerosene to make winter mix, for use in diesel engines in cold climatic conditions. No one has been entitled to claim a fuel tax credit on the diesel or on the heating oil. The blend is not excisable, as both components have been duty-paid at the same rate. |
Blends covered by this determination are blends that are not marketed or sold as fuel for an internal combustion engine; and either
- The blend contains one of the substance in the minimum concentration listed below; or
- The blend contains more than one of the substances listed below so that the total concentration of these substances is at least 10% by volume.
Product | Minimum concentration for % v/v |
Tertiary butyl alcohol | 0.5 |
Other alcohols (other than methanol, ethanol and isopropyl alcohol) | 10.0 |
Ketones | 10.0 |
Methyl tertiary butyl ether | 1.0 |
Di-isopropyl ether | 1.0 |
Other ethers | 10.0 |
Esters | 10.0 |
Surfactants | 1.0 |
Silicone Oils | 2.0 |
Oleic Acid | 2.0 |
Water | 5.0 |
Example 11D | |
An entity makes a range of solvent formulations which it does not market as being for use as fuel in an internal combustion engine. | |
Blend 1 | 90% toluene with 10% methyl ethyl ketone |
This does not constitute a fuel for FTC purposes since the minimum concentration for ketones is 10% | |
Blend 2 | 90% toluene with 8% methyl ethyl ketone and 2% butanol |
This does not constitute a fuel for FTC purposes since the total of ketones and other alcohols is greater than 10% | |
Blend 3 | 90% toluene with 4% methyl ethyl ketone, 4% butanol and 2% benzene. |
This constitutes a fuel for FTC purposes since the total of ketones and other alcohols is less than 10% |
If you are unsure whether the products you produce are subject to excise duty under item 15 of the Schedule to the Excise Tariff Act you can seek specific advice from us. |
For more information on the Commissioner's view on manufacture for the purposes of the Excise Act refer to ER 2012/D1: Excise the meaning of the expression 'manufactured or produced' for the purposes of the Excise Acts. |
Subsection 77H(2A) of the Excise Act
This subsection applies to the blending of the following fuels.[209A]- gasoline for use in aircraft
- kerosene for use in aircraft
- LPG
- LNG
- CNG that is classified to subitem 10.19C of the Schedule to the Excise Tariff Act 1921
- are not subject to a remission of excise or customs duty, either in full or in part; and
- any excise or customs duty payable on the fuels has been paid.
Example 11E A quantity of LPG was duty paid on 3 July 2012 at a rate of $0.05 per litre (with no remission available because it was intended for use in transport), and it is added to a tank containing a quantity of LPG that was duty paid prior to 1 July 2012 at a rate of $0.025 (also with no remission available because it was intended for a transport use). The blending does not constitute manufacture. |
For this blending exemption to apply, the blending of the fuel must have occurred after 1 July 2012. However if the blending occurred prior to 1 July 2012, the blending will be exempt from being excise manufacture provided duty has been paid on the quantities of fuel blended at the same rate of duty. |
For more information on the remissions refer to Chapter 7 - Remissions, refunds, drawback and exemptions |
Subsection 77H(2B) of the Excise Act
This subsection applies to the blending of LPG or LNG where the fuel has been eligible for an excise or customs remission, regardless of the level of remission. The blending of LPG or LNG is not excise manufacture if:- the fuel is subject to a remission, either in full or in part, of excise or customs duty because it is not used, or intended for use, in an internal combustion engine in either a motor vehicle or a vessel; or
- the fuel is not subject to excise or customs duty because it was manufactured, produced or imported before 1 December 2011.
Example 11F Euan's BBQ Bonanza Gas receives a delivery of 10,000 litres of LPG on 15 July 2012 that his supplier has applied the partial remission to as he knows that Euan's BBQ Bonanza only supplies LPG in 9 kilogram barbeque bottles. The LPG is delivered into Euan's bulk tank that already contains 4,000 litres of LPG delivered on 20 June 2012 that was the subject of the full remission. The blending of these two quantities of LPG, although subject to different duty rates does not constitute excise manufacture and therefore the blend is not subject to duty. The LPG is delivered into Euan's bulk tank that already contains 4,000 litres of LPG delivered on 20 June 2012 that was the subject of the full remission. The blending of these two quantities of LPG, although subject to different duty rates, does not constituted excise manufacture. |
The exemption only applies where each quantity of LPG or LNG that is blended are subject to a remission, either in full or in part. |
For more information on the remissions refer to Chapter 7 - Remissions, refunds, drawback and exemptions |
11.3.3 WHAT IF I WANT TO BLEND IMPORTED FUEL?
The Tax Office acknowledges that long standing practice in the fuel industry in relation to imported fuels has been to mix imported fuel with local fuel and then deal with the resulting fuel through the excise system. We accept that mixing of imported fuel with local fuel, in premises covered by an excise manufacturer licence and a Customs warehouse licence is blending covered by section 77G of the Excise Act, is therefore manufacture. This position is supported by section 24 of the Excise Act. Section 24 provides that: 'Excisable goods and goods liable to duties of customs may be used in manufacturing excisable goods. Goods liable to duties of Customs may, while subject to control of the Customs, be used in the manufacture of excisable goods in accordance with this Act. The regulations may prescribe conditions on the use of goods liable to duties of Customs, while subject to the control of the Customs, in the manufacture of excisable goods.' The Customs Act 1901 provides for the extinguishment of customs duty on fuel where certain imported goods (including fuel) are used in the manufacture of excisable goods[210]. The manufacture must occur at premises covered by both an excise manufacturer licence and a Customs warehouse licence.11.3.4 HOW DO I CALCULATE THE DUTY PAYABLE ON MY EXCISABLE BLENDED PRODUCT?
In the Schedule to the Excise Tariff Act, there are three specific biofuel blends with separate subitems and a general subitem for other blends. If you are blending fuels of the same type (eg petrol with petrol) or where a blend has the characteristics accepted in the industry for a particular product mentioned in the Schedule to the Excise Tariff Act (eg see example 11B above) it is classified to the specific subitem and not as a blend.Subitem | Description of goods | Rate of Duty | |
10.7 | Blends of gasoline and ethanol | The amount of duty worked out under section 6G | |
10.11 | Blends of diesel and ethanol | The amount of duty worked out under section 6G | |
10.12 | Blends of diesel and biodiesel | The amount of duty worked out under section 6G | |
10.30 | Blends of 1 or more of the above goods (with or without other substances) not elsewhere included that can be used as fuel in an internal combustion engine (other than goods covered by section 77J of the Excise Act 1901) | The amount of duty worked out under section 6G | |
Step 1 | Add up the amount of duty that would be payable on each constituent of the blend that is classified to item 10 of the Schedule to the Excise Tariff Act 1921 |
Step 2 | Work out the volume, in litres, of any other constituent of the blend (excluding any water added to the manufacture of the blended goods).[210A] |
Step 3 | Multiply the result of step 2 by $0.38143. |
Step 4 | Total the results of steps 1 and 3. |
Step 5 | Subtract from the total any duty paid on a constituted of the blended goods that is classified to item 10 or 15 of the Schedule to the Excise Tariff Act 1921 |
Example 11E A manufacturer makes a solvent blend to a customer's specification from 10,000 litres of toluene upon which duty has been paid (classified to subitem 10.25 of the Schedule to the Excise Tariff Act) and 100 litres of a synthetic performance enhancement which is not classifiable in its own right to the Schedule to the Excise Tariff Act. The blend is capable of being used as fuel in an internal combustion engine. The blend is classified to subitem 10.30 of the Schedule to the Excise Tariff Act. Duty is payable on the blend as follows: | ||
Step 1 | 10,000 litres of toluene @ $0.38143 per litre | $3,814.30 |
Step 2 | 100 litres of synthetic performance enhancement | |
Step 3 | 100 litres x $0.38143 | $ 38.14 |
Step 4 | Total of steps 1 and 3 | $3,854.44 |
Step 5 | Less duty paid | -$3,814.30 |
Duty payable on the blend (to nearest $) | $ 38.14 |
11.3.5 HOW DO I ACCOUNT FOR FUEL USED IN THE MANUFACTURE OF NON-EXCISABLE GOODS?
Before underbond excisable fuel products can be blended as part of the manufacture of non-excisable goods (eg when they are used in the manufacture of paint), they must be 'delivered' into the Australian domestic market. If you have a PSP, the underbond product is deemed to be delivered into the Australian domestic market at the point the blend is made and would be included in the next excise return. If you do not have a PSP you need to enter the product on an excise return, pay the duty and receive an Authority to delivery excisable goods before you make the blend.Example 11F Lionel's Solvents is licensed to manufacture toluene and has a PSP. Lionel's Solvents wants to use some underbond toluene to make a blend that cannot be used as fuel in an internal combustion engine. Lionel's Solvents must include the toluene used in the blend on its next excise return as subitem 10.25 of the Schedule to the Excise Tariff Act and pay duty at the rate of $0.38143 per litre. The toluene is 'delivered into the Australian domestic market' at the time the blend is made. |
Example 11G Barry's Blenders wants to make a blend of 90% toluene and 10% methyl ethyl ketone (MEK). They have 9,000 litres of underbond toluene. The blend is covered by Fuel Tax (Fuel blends) Determination 2006 (No. 3), and is not excisable. The act of blending the toluene into the final product that can't be used in an internal combustion engine is the point where the toluene is considered to be delivered into the Australian domestic market. Barry's Blenders must include the 9,000 litres of toluene in their next excise return, if they hold a PSP, or lodge an excise return prior to undertaking the blending process if there is no PSP in place. The toluene is entered on the return under subitem 10.25 of the Schedule to the Excise Tariff Act and duty is payable at the rate of 38.143 cents per litre. The blend itself is not included in an excise return. |
11.4 PROCEDURES
11.4.1 WHERE CAN I FIND COPIES OF THE DETERMINATIONS?
You can access copies of the determinations on our website at www.ato.gov.au
11.4.2 WHAT DO I DO IF I NEED MORE INFORMATION?
If you need more information on blending contact us as follows:- phone 1300 137 292
- fax (03) 9285 1168, or
- write to us at
Australian Taxation Office
PO Box 3001
PENRITH NSW 2740
11.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO BLENDING?
The following are the penalties that may apply after conviction for an offence. Manufacture If you manufacture excisable fuel products without a manufacturer licence, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products.[212] If you manufacture excisable fuel products contrary to the Excise Act or any conditions specified in your licence, the penalty is a maximum of two years in prison or 500 penalty units.[213] If you manufacture excisable fuel products at premises that are not specified in your licence, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products.[214] Move, alter or interfere If you move underbond excisable fuel products without approval, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products.[215] Note: This includes moving underbond excisable fuel products from your premises to any other location or for export. If your movement of underbond excisable fuel products does not comply with the permission to move the underbond excisable fuel products, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products.[216] If you move, alter or interfere with excisable fuel products that are subject to excise control, without permission, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products.[217] Deliver If you deliver excisable fuel products into the Australian domestic market contrary to your permission, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products.[218] Sell If you sell excisable fuel products on which duty has not been paid (unless it is an underbond sale), the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products.[219] Records If you do not keep, retain and produce records in accordance with a direction under section 50 of the Excise Act, the penalty is a maximum of 30 penalty units. Directions If you do not comply with a direction in regard to what parts of the factory can be used for various matters, the penalty is a maximum of 10 penalty units.[220] False or misleading statements If you make a false or misleading statement, or an omission from a statement in respect of duty payable on particular goods, to us, a penalty not exceeding the sum of 50 penalty units and twice the amount of duty payable on those goods.[221] Evade If you evade payment of any duty which is payable, the maximum penalty is 5 times the amount of duty on the excisable fuel products, or where a court cannot determine the amount of that duty the penalty is a maximum of 500 penalty units..[222] Facilities etc. If you do not provide all reasonable facilities for enabling us to exercise our powers under the Excise Act, the penalty is a maximum of 10 penalty units.[223] If you do not provide sufficient lights, correct weights and scales, and all labour necessary for weighing material received into and all excisable fuel products manufactured in your factory, and for taking stock of all material and excisable fuel products contained in your factory, the maximum penalty is 10 penalty units.[224] If we mark or seal excisable fuel products or fasten, lock or seal any plant in your factory and you alter, open, break or erase the mark, seal, fastening or lock, the maximum penalty is 50 penalty units.[225]11.6 TERMS USED
Deliver into the Australian domestic market[226]'Deliver into the Australian domestic market' is the term we use in this manual for when excisable fuel products are released into domestic consumption. The term used in the legislation is 'deliver for home consumption'.
Normally this will be by delivering the goods away from licensed premises but includes using those goods within the licensed premises (for example using fuel to run equipment in your licensed premises). It does not include goods delivered for export or the movement of goods underbond (see definition below) to another licensed site. The term 'home consumption' is not defined in the Excise Act and there is no definitive case law that looks at the issue in question. However there are several cases where issues closely related to it are considered.[227] The conclusion drawn from those cases is that 'home consumption' refers to the destination of goods as being within Australia as opposed to exporting them. Excisable goods Excisable goods are goods on which excise duty is imposed. Excise duty is imposed on goods that are manufactured or produced in Australia and listed in the Schedule to the Excise Tariff Act. As these guidelines deal with fuel products, we have used the term excisable fuel products. Excisable fuel products include:- petrol
- diesel
- renewable diesel
- crude petroleum oil
- condensate
- heating oil
- kerosene
- fuel ethanol
- biodiesel
- compressed natural gas (CNG)
- liquefied natural gas (LNG), and
- liquefied petroleum gas (LPG).
- the volume of excisable fuel products that you have delivered into the Australian domestic market during the period designated on your PSP, or
- the volume of excisable fuel products that you wish to deliver into the Australian domestic market following approval.
11.7 LEGISLATION (quick reference guide)
In this chapter we have referred to the following legislation:11.7.1 Excise Act 1901
Section 24 - Excisable goods and goods liable to duties of Customs may be used in manufacturing excisable goods Section 25 - Only licensed manufacturers to manufacture excisable goods Section 26 - Licensed manufacturers to manufacture in accordance with Act and licence Section 27 - Licensed manufacturers to manufacture only at licensed premises Section 49 - Facilities to officers Section 50 - Record keeping Section 51 - Collector may give directions Section 52 - Weights and scales Section 58 - Entry for home consumption etc. Section 61 - Control of excisable goods Section 61A - Permission to remove goods that are subject to CEO's control Section 61C - Permission to deliver certain goods for home consumption without entry Section 77G - Fuel blending is to be treated as manufacture Section 77H - Blending exemptions Section 77HB - Liquefied petroleum gas and liquefied natural gas that is exempt from excise duty Section 77J - Goods that are not covered by subitem 10.25, 10.26, 10.27, 10.28 or 10.30 Section 92 - Seals etc. not to be broken Section 117A - Unlawfully moving excisable goods Section 117B - Unlawfully selling excisable goods Section 120 - Offences11.7.2 Excise Tariff Act 1921
Section 6G - Duty payable on blended goods The Schedule11.7.3 Customs Act 1901
Part VAA - Special provisions relating to excise-equivalent goods11.7.4 Fuel Tax Act 2006
Section 95-5 - Determination of blends that no longer constitute fuels11.7.5 Crimes Act 1914
Section 4AA - Penalty units12 SOLVENTS
OUR COMMITMENT TO YOU The information in this publication is current at May 2009. This publication is an expression of the Commissioner's opinion on the operation of fuel excise legislation. This publication is not legally or administratively binding on the Commissioner and is not a 'public ruling' for the purposes of Section 105-60 or Division 358 of Schedule 1 to the Taxation Administration Act 1953. The law does not provide for legally binding rulings on fuel excise legislation. If you feel this publication does not fully cover your circumstances, please seek help from the Tax Office or a professional adviser. Since we regularly revise our publications to take account of any changes to the law, you should make sure this edition is the latest. The easiest way to do this is by checking for a more recent version on our website at www.ato.gov.au |
If you want to enquire about amending the fuel blends determination you will need to contact us. |
12.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO SOLVENTS? |
12.1 PURPOSE
This chapter deals with:- what a solvent is
- obligations that arise with the blending of solvents
- obligations associated with dealing with underbond and duty-paid product
- packaging concessions for solvent suppliers
- the recycling concession for solvent users
- remissions of duty where solvents are chemically transformed
- entitlement to fuel tax credits for excise paid on solvents, and
- penalties that can apply to offences in relation to solvents.
12.2 INTRODUCTION
12.2.1 WHAT IS A SOLVENT?
Most fuels used in a non-fuel application are used as solvents. When referring to solvents we are referring to fuels used to dissolve or form solutions with other substances. Solvents are used in a wide range of industrial processes, for example cleaning. They can also be blended into other products such as paints and adhesives.Most solvents are classified to subitems 10.16, 10.25, 10.26, 10.27, 10.28 or 10.30 of the Schedule to the Excise Tariff Act. |
How much excise do I have to pay on solvents?
Excise is payable on the majority of solvents. Very limited exceptions apply.[229] The applicable excise rate is 38.143 cents per litre[230].For more information about excise rates refer to Chapter 10 - Fuel in the excise tariff. |
Am I entitled to a fuel tax credit for excise paid on solvents?
If you acquire, manufacture, or import into Australia, solvents that are subject to fuel tax[231] for use in your business, you may be entitled to a fuel tax credit. If you package certain solvents into small packages you may be entitled to a fuel tax credit.For more information on packaging rules and fuel tax credits visit our website at www.ato.gov.au and refer to Fuel schemes essentials. |
12.3 POLICY AND PRACTICE
12.3.1 WHAT ARE MY OPTIONS?
The options available to you depend upon what you intend to do with the solvents. If you intend to manufacture other excisable goods then you need to be licensed as a manufacturer. If you are licensed you will be able to receive fuel underbond If you intend to use the solvents other than to manufacture excisable goods you will need to use duty paid solvents. There is one exception to this. If you intend to use solvents to manufacture non excisable goods and the solvents are chemically transformed (other than by combustion) during the manufacturing process then you may be able to have a storage licence and receive the solvent underbondUnderbond solvents
To receive underbond solvents:- you will need to hold an excise licence, and
- you or your supplier will need to hold a movement permission (Continuing or Single) that allows the product to move underbond between the licensed premises.
- you do not have to pay excise duty until it is delivered into the Australian domestic market (this includes consumption by an excise licence holder on licensed premises), and
- if you hold a periodic settlement permission (PSP), you must enter the amount used or delivered in your settlement period on your weekly excise return and pay the relevant duty, or
- If you do not hold a PSP then you will need to lodge an excise return prior to using or delivering the solvent, pay the relevant duty and wait until you receive a Delivery Authority from us.
For more information about periodic settlement permissions and payment of duty see Chapter 6 - Payment of duty. |
Duty-paid solvents
Duty-paid solvents are outside the excise system and therefore no reporting requirements apply and you do not need an excise licence to receive them. However, if you are unlicensed you cannot use a duty-paid solvent to create another excisable fuel product, as this is excise manufacture and requires a licence.For more information about whether a particular process involves excise manufacture you should seek advice from us. See section 13.4.1 - What do I do if I need more information? |
12.3.2 BLENDING SOLVENTS
A blended solvent is produced by blending an excisable fuel with:- another excisable fuel, or
- another substance.
Excisable blends
You must hold an excise manufacturer licence to make an excisable blend. You must pay excise on a blend when it is delivered into the Australian domestic market. The amount of excise is calculated under section 6G of the Excise Tariff Act, and takes into account any excise already paid.For more information about Section 6G refer to 11.2.1 in Chapter 11 - Blending. |
Excisable blends are classified to subitem 10.30 of the Schedule to the Excise Tariff Act unless it is a distinct product as described in the Schedule, such as:
|
Non-excisable blends
You do not need an excise manufacturer licence to make a non-excisable blend. There are four circumstances when a blend is not excisable:- all the components of the blend are duty-paid at the same rate (this does not include blends containing ethanol, biodiesel or fuel on which a person is entitled to a fuel tax credit)
- any excisable component is duty-paid and the blend falls within a determination made under section 95-5 of the Fuel Tax Act 2006[232]
- any excisable component is duty-paid and the blend is a product that would otherwise be classified to subitem 10.30 of the Schedule to the Excise Tariff Act but cannot be used as fuel in an internal combustion engine, or
- the user of the solvent recycles the solvent for further use by them as a solvent (see Section 13.3.3 - What is the solvent recycling exemption?).
For more information about excise rates refer to Chapter 11 - Blending |
12.3.3 WHAT IS THE SOLVENT RECYCLING EXEMPTION?
For a user of a duty-paid solvent to be exempt from excise, the solvent must be used in the manufacture of other goods, recycled by the person who used the solvent, the resulting recycled solvent must be classifiable to the same subitem as the original and the resulting recycled solvent must be for use by the same person.[233] This applies to the following fuels:- liquid aromatic hydrocarbons (consisting principally of benzene, toluene or xylene or mixtures of them) - subitem 10.25 of the Schedule to the Excise Tariff Act
- mineral turpentine - subitem 10.26 of the Schedule to the Excise Tariff Act
- white spirit - subitem 10.27 of the Schedule to the Excise Tariff Act
- petroleum products (other than blends) not elsewhere included - subitem 10.28 of the Schedule to the Excise Tariff Act, or
- blends not elsewhere included - subitem 10.30 of the Schedule to the Excise Tariff Act.
Example 12A A car components manufacturer makes body panels under contract for a major car maker. They purchase duty-paid solvent, classifiable to subitem 10.30, which is sprayed onto steel sheets to degrease them prior to pressing into panels. Excess solvent runs off, is collected in a sump and recirculated. Over time the solvent becomes too contaminated for further use. The manufacturer puts the contaminated solvent through a recycling process and returns the recycled solvent to the sump for further use. Under this exemption subitem 10.30 does not apply to this recycled solvent and it is not excisable. |
12.3.4 REMISSION OF DUTY FOR CHEMICAL TRANSFORMATION
If your fuel product is transformed through a chemical reaction (other than combustion) to produce a product that is not excisable the duty is automatically remitted on the fuel.[234] This is the case in some large-scale petrochemical manufacturing processes. The remission allows manufacturers who chemically transform fuel to do this without incurring excise duty and having to claim fuel tax credits. The remission does not apply if the fuel:- is merely mixed with other substances to make products such as solvents, cleaning agents or paint (that is there is no chemical transformation),
- is used in a manner other than chemical transformation, or
- is used as a fuel (i.e. combustion).
Example 12A Benzene is sold to a polystyrene manufacturer who holds an excise storage licence. The polystyrene manufacturer may obtain underbond benzene from a manufacturer or supplier. The benzene is chemically transformed into styrene during the process. Styrene is not an excisable product. Liability for duty is remitted when the benzene is chemically transformed into styrene. The manufacturer does not have to pay duty on the benzene. However, the manufacturer must keep records of the volume of benzene used when directed, and produce these on request.[235] |
12.4 PROCEDURES
12.4.1 WHAT DO I DO IF I AM MANUFACTURING A PRODUCT THAT I WANT ADDED TO THE FUEL BLENDS DETERMINATION?
If you want to enquire about amending the fuel blends determination you will need to contact us.WHAT DO I DO IF I NEED MORE INFORMATION?
If you need more information on solvents contact us as follows:- phone 1300 137 292
- fax (03) 9285 1168, or
- write to us at
Australian Taxation Office
PO Box 3001
PENRITH NSW 2740
12.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO SOLVENTS?
The following are the penalties that may apply after conviction for an offence. Manufacture If you manufacture excisable fuel products without a manufacturer licence, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products.[236] If you manufacture excisable fuel products contrary to the Excise Act or any conditions specified in your licence, the penalty is a maximum of two years in prison or 500 penalty units.[237] If you manufacture excisable fuel products at premises that are not specified in your licence, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products.[238] Move, alter or interfere If you move underbond excisable fuel products without approval, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products.[239] Note: This includes moving underbond excisable fuel products from your premises to any other location or for export. If your movement of underbond excisable fuel products does not comply with the permission to move the underbond excisable fuel products, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products.[240] If you move, alter or interfere with excisable fuel products that are subject to excise control, without permission, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products.[241] Deliver If you deliver excisable fuel products into the Australian domestic market contrary to your permission, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products.[242] Records If you do not keep, retain and produce records in accordance with a direction under section 50 of the Excise Act, the penalty is a maximum of 30 penalty units. Directions If you do not comply with a direction in regard to what parts of the factory can be used for various matters, the penalty is a maximum of 10 penalty units.[243] False or misleading statements If you make a false or misleading statement, or an omission from a statement in respect of duty payable on particular goods, to us, a penalty not exceeding the sum of 50 penalty units and twice the amount of duty payable on those goods.[244] Evade If you evade payment of any duty which is payable, the maximum penalty is 5 times the amount of duty on the excisable fuel products, or where a court cannot determine the amount of that duty the penalty is a maximum of 500 penalty units.[245] Facilities etc. If you do not provide all reasonable facilities for enabling us to exercise our powers under the Excise Act, the penalty is a maximum of 10 penalty units.[246] If you do not provide sufficient lights, correct weights and scales, and all labour necessary for weighing material received into, and all excisable fuel products manufactured in, your factory and for taking stock of all material and excisable fuel products contained in your factory, the maximum penalty is 10 penalty units.[247] If we mark or seal excisable fuel products or fasten, lock or seal any plant in your factory and you alter, open, break or erase the mark, seal, fastening or lock, the maximum penalty is 50 penalty units.[248]12.6 TERMS USED
Deliver into the Australian domestic market[249]'Deliver into the Australian domestic market' is the term we use in this manual for when excisable fuel products are released into domestic consumption. The term used in the legislation is 'deliver for home consumption'.
Normally this will be by delivering the goods away from licensed premises but includes using those goods yourself (for example using in your own operation). The term 'home consumption' is not defined in the Excise Act and there is no definitive case law that looks at the issue in question. However there are several cases where issues closely related to it are considered.[250] The conclusion drawn from those cases is that 'home consumption' refers to the destination of goods as being within Australia as opposed to exporting them. Excisable fuel products Excisable goods are goods on which excise duty is imposed. Excise duty is imposed on goods that are manufactured or produced in Australia and listed in the Schedule to the Excise Tariff Act. As these guidelines deal with fuel products, we have used the term excisable fuel products. Excisable fuel products include:- petrol
- diesel
- crude petroleum oil
- heating oil
- kerosene
- fuel ethanol, and
- biodiesel.
- the volume of excisable fuel products that you have delivered into the Australian domestic market during the period designated on your PSP, or
- the volume of excisable fuel products that you wish to deliver into the Australian domestic market following approval.
12.7 LEGISLATION (quick reference guide)
In this chapter we have referred to the following legislation:12.7.1 Excise Act 1901
Section 24 - Excisable goods and goods liable to duties of Customs may be used in manufacturing excisable goods Section 25 - Only licensed manufacturers to manufacture excisable goods Section 26 - Licensed manufacturers to manufacture in accordance with Act and licence Section 27 - Licensed manufacturers to manufacture only at licensed premises Section 49 - Facilities to officers Section 50 - Record keeping Section 51 - Collector may give directions Section 52 - Weights and scales Section 58 - Entry for home consumption etc. Section 61 - Control of excisable goods Section 61A - Permission to remove goods that are subject to CEO's control Section 61C - Permission to deliver certain goods for home consumption without entry Section 77H - Blending exemptions Section 77J - Goods that are not covered by subitem 10.25, 10.26, 10.27, 10.28 or 10.30 Section 78 - Remissions, rebates and refunds Section 92 - Seals etc. not to be broken Section 117A - Unlawfully moving excisable goods Section 117B - Unlawfully selling excisable goods Section 120 - Offences12.7.2 Crimes Act 1914
Section 4AA - Penalty units13 OIL RECYCLING
OUR COMMITMENT TO YOU The information in this publication is current at May 2009. This publication is an expression of the Commissioner's opinion on the operation of fuel excise legislation. This publication is not legally or administratively binding on the Commissioner and is not a 'public ruling' for the purposes of Section 105-60 or Division 358 of Schedule 1 to the Taxation Administration Act 1953. The law does not provide for legally binding rulings on fuel excise legislation. If you feel this publication does not fully cover your circumstances, please seek help from the Tax Office or a professional adviser. Since we regularly revise our publications to take account of any changes to the law, you should make sure this edition is the latest. The easiest way to do this is by checking for a more recent version on our website at www.ato.gov.au |
13.1 PURPOSE
This chapter deals with:- what constitutes oil recycling
- how the excise system applies to oil recycling
- circumstances where duty is not payable on recycled oil, and
- blending of recycled oil products.
13.2 INTRODUCTION
13.2.1 WHAT IS OIL RECYCLING?
Oil recycling involves the use of processes to convert used oils into saleable products that can be reused. This conversion constitutes excise manufacture and requires an excise manufacturer licence. Some of these products are excisable fuel products.For more information about obtaining an excise manufacturer licence see Chapter 2 - Licensing: Applications. |
13.3 POLICY AND PRACTICE
13.3.1 HOW DO I KNOW WHEN MY RECYCLING PROCESS ALSO CONSTITUTES EXCISE MANUFACTURE?
Recycling includes filtering, de-watering, separation of contaminants by settlement, centrifuge and refining to treat waste or contaminated oils or fuels. However, it is noted that these processes can be performed with varying levels of effectiveness depending on the type of equipment or process used. We take the view that the following processes do not constitute recycling:- filtering to screen out relatively large solid objects such as nuts, washers and bolts from waste oil or fuel as it is pumped into a truck's collection tank;
- the removal of water (de-watering) due to settling in a truck's collection tank as part of the collection of waste oil; or
- de-watering due to settling of waste oil in a tank or other receptacle at workshops, industrial premises or other places where it has been accumulated before being pumped into a truck's collection tank.[252]
DO I HAVE TO PAY EXCISE ON RECYCLED OIL?
Yes, you must pay excise duty on liquid hydrocarbon products produced through a recycling, manufacturing or other process.[253] This includes products derived from petroleum and non-petroleum sources. You must also pay excise duty on petroleum based oils (including lubricant/fluid/oil products and greases) and their synthetic equivalents that are recycled for use as oils or greases. [254] Excise treatment of blended recycled products depends on whether the blend is an excisable blend or a blend that is not excisable.For more information about blending and excisable blends refer to Chapter 11 - Blending. |
Example 13A Mark's Oil Recycling filters and de-waters waste oil (consisting mainly of used engine lubricant oil) to produce an industrial burner fuel. The product does not meet industry product standards for heating oil and is not 'fuel oil' as defined in the Excise Tariff Act. The product is excisable and classified to subitem 10.28 of the Schedule to the Excise Tariff Act. |
Example 13B Max's manufacturing company uses waste plastic to produce a fuel that meets the diesel standard. The fuel (diesel) is classifiable to subitem 10.10 of the Schedule to the Excise Tariff Act. |
13.3.2 WHAT RECYCLED FUELS ARE NON-EXCISABLE?
Recycled solvents
A recycled solvent product does not attract excise if:[255]- the product was originally delivered into the Australian domestic market under subitems 10.25, 10.26, 10.27, 10.28 or 10.30 of the Schedule to the Excise Tariff Act
- you used the product as a solvent
- you recycle it for your own re-use as a solvent, and
- when recycled, the product is classified to its original subitem of the Schedule to the Excise Tariff Act.
Example 13D - solvent recycling that is non- excisable Peter's Spray Shed uses solvents to clean spray painting equipment on a weekly basis. After two month's use the solvent becomes unusable. The solvents are recycled by Peter's Spray Shed by putting them through a basic filtering process to remove impurities. The recycled solvent is then used for cleaning spray equipment. The recycled solvent does not attract excise duty and Peter's Spray Shed does not require an Excise manufacturer's licence for this recycling. |
The exemption does not apply where someone other than the user recycles the solvent. |
Recycled oil that will be used to make a non-excisable blend?
Some blended recycled products are non-excisable. Blended products that are not suitable for use in an internal combustion engine are not excisable. However excise duty must be paid on any excisable constituents of the blend.Example 13E - blend that is non-excisable Mark's Recycling produces low grade burner fuel by recycling waste oil. The low grade burner fuel is classifiable to subitem 10.28 of the Schedule to the Excise Tariff Act. Mark's Recycling wants to blend the low grade burner fuel with duty-paid diesel to make coal spray oil. Because of the composition of the coal spray oil it cannot be used as a fuel in an internal combustion engine. The coal spray oil is not classified to subitem 10.30 of the Schedule to the Excise Tariff Act as it cannot be used in an internal combustion engine. Even though the coal spray oil is not excisable, Mark's Recycling must pay excise duty on the low grade burner fuel that was used in its production. The low grade burner fuel is considered to be delivered into the Australian domestic market at the point of blending with the duty paid diesel. Mark's Recycling will need to lodge an excise return and pay the duty liability on the low grade burner fuel. |
13.3.3 HOW DO I WORK OUT THE AMOUNT OF EXCISE DUTY I NEED TO PAY?
The amount of excise you're liable to pay depends on the rate of excise on the recycled oil and the quantity of oil you produce.What is the rate of excise?
The rate of excise you are liable to pay is set out in the Schedule to the Excise Tariff Act.For more information refer to Chapter 6 - Payment of Duty. |
Example 13F A recycler produces a liquid hydrocarbon product that meets industry product standards for heating oil. As their product is classified to subitem 10.15 of the Schedule to the Excise Tariff Act the recycler pays excise duty at the rate of $0.38143 per litre. |
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Example 13G An oil recycler filters and de-waters waste oil consisting mainly of used engine lubricant oil. They produce a liquid hydrocarbon product suitable for use as an industrial burner fuel. The product does not meet industry product standards for heating oil and is not 'fuel oil' as defined in the Excise Tariff Act. As their product is classified to subitem 10.28 of the Schedule to the Excise Tariff Act the oil recycler pays excise duty at the rate of $0.38143 per litre. |
How do I measure the volume of recycled oil?
If you deliver excisable goods into the Australian domestic market you must accurately measure volumes of recycled oil. This ordinarily means using calibrated tanks or flow meters. If you recycle oil for your own use, you can measure the volume of the recycled oil by using:- a properly calibrated flow meter;
- a formula that determines the volume of output by using historical data from similar oil, or
- any other similarly accurate method that has been approved at the time your licence was issued.[256]
When do I have to pay excise duty?
For more information about payment of duty refer to Chapter 6 - Payment of Duty. |
Example 13H Mario's Waste Oil Recycling produces 1,000 litres of diesel fuel from waste oil and sells the product for electricity generation. This product is classified to subitem 10.10 of the Schedule to the Excise Tariff Act and duty is payable on the diesel at the rate of $0.38143 per litre. Mario's Waste Oil Recycling has a periodic settlement permission. Mario's Waste Oil Recycling declares the 1,000 litres on their weekly excise return and pays excise duty of $381.43. |
Example 13I Pauline's Brickworks holds an excise manufacturer licence to recycle waste oil. It collects 1,500 litres of waste oil and recycles it for use as a burner fuel in their brick kilns. The product is a petroleum based recycled waste oil that cannot be classified to a specific subitem of the Schedule to the Excise Tariff Act. This product is classified to subitem 10.28 of the Schedule to the Excise Tariff Act and excise duty is payable on the recycled waste oil at the rate of $0.38143 per litre. Pauline's Brickworks has a periodic settlement permission. It declares the 1,500 litres on the weekly excise return that is lodged after the product is used in the brick kilns, and pays excise duty of $572.14. |
13.3.4 WHEN CAN I GET AN EXCISE DUTY REMISSION OR REFUND?
In certain situations you may be entitled to a refund or remission of the excise duty paid or payable on recycled oils. [257] These circumstances were introduced at the same time as the introduction of the PSO scheme to ensure that oil products that are recycled using relatively simple processes such that no entitlement to a PSO benefit arises are not subjected to the 5.449 cents per litre duty on oils. A remission of duty is available for recycled oil products if:- the recycled product is hydraulic oil, brake fluid, transmission oil, transformer oil or heat transfer oil classified to subitem 15.2 of the Schedule to the Excise Tariff Act
- no PSO benefit is payable
- the recycled product will be used for the same purpose for which it was used before being recycled (i.e. recycled transmission oil will be used as transmission oil etc), and
- the recycled product is delivered into the Australian domestic market under a periodic settlement permission.
- the recycled product is hydraulic oil, brake fluid, transmission oil, transformer oil or heat transfer oil classified to subitem 15.2 of the Schedule to the Excise Tariff Act
- no PSO benefit is payable
- the product has been used for the same purpose for which it was used before being recycled.
For more information about excise remissions and refunds refer to Chapter 7 - Remissions, refunds, drawbacks and exemptions. |
13.3.5 CAN I CLAIM A CREDIT OR BENEFIT FOR THE EXCISE DUTY I HAVE PAID?
If the product of your recycling activities is a taxable fuel[258] (for fuel tax credits purposes) you may be able to claim a fuel tax credit if you use this fuel in your business. You may also be entitled to a benefit under the PSO program for the oil you recycle. For more information on:
|
13.4 PROCEDURES
13.4.1 WHAT DO I DO IF I NEED MORE INFORMATION?
If you need more information on oil recycling contact us as follows:- phone 1300 137 292
- fax (03) 9285 1168, or
- write to us at
Australian Taxation Office
PO Box 3001
PENRITH NSW 2740
13.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO OIL RECYCLING?
The following are the penalties that may apply after conviction for an offence. Manufacture If you manufacture excisable fuel products without a manufacturer licence, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products.[259] If you manufacture excisable fuel products contrary to the Excise Act or any conditions specified in your licence, the penalty is a maximum of two years in prison or 500 penalty units.[260] If you manufacture excisable fuel products at premises that are not specified in your licence, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products.[261] Move, alter or interfere If you move underbond excisable fuel products without approval, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products.[262] Note: This includes moving underbond excisable fuel products from your premises to any other location or for export. If your movement of underbond excisable fuel products does not comply with the permission to move the underbond excisable fuel products, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products.[263] If you move, alter or interfere with excisable fuel products that are subject to excise control, without permission, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products.[264] Deliver If you deliver excisable fuel products into the Australian domestic market contrary to your permission, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products.[265] Records If you do not keep, retain and produce records in accordance with a direction under section 50 of the Excise Act, the penalty is a maximum of 30 penalty units. Directions If you do not comply with a direction in regard to what parts of the factory can be used for various matters, the penalty is a maximum of 10 penalty units.[266] False or misleading statements If you make a false or misleading statement, or an omission from a statement in respect of duty payable on particular goods, to us, a penalty not exceeding the sum of 50 penalty units and twice the amount of duty payable on those goods.[267] Evade If you evade payment of any duty which is payable, the maximum penalty is 5 times the amount of duty on the excisable fuel products, or where a court cannot determine the amount of that duty the penalty is a maximum of 500 penalty units.[268] Facilities etc. If you do not provide all reasonable facilities for enabling us to exercise our powers under the Excise Act, the penalty is a maximum of 10 penalty units.[269] If you do not provide sufficient lights, correct weights and scales, and all labour necessary for weighing material received into, and all excisable fuel products manufactured in, your factory and for taking stock of all material and excisable fuel products contained in your factory, the maximum penalty is 10 penalty units.[270] If we mark or seal excisable fuel products or fasten, lock or seal any plant in your factory and you alter, open, break or erase the mark, seal, fastening or lock, the maximum penalty is 50 penalty units.[271]13.6 TERMS USED
Deliver into the Australian domestic market[272]'Deliver into the Australian domestic market' is the term we use in this manual for when excisable fuel products are released into domestic consumption. The term used in the legislation is 'deliver for home consumption'.
Normally this will be by delivering the goods away from licensed premises but includes using those goods yourself (for example using the fuel in your own operations). The term 'home consumption' is not defined in the Excise Act and there is no definitive case law that looks at the issue in question. However there are several cases where issues closely related to it are considered.[273] The conclusion drawn from those cases is that 'home consumption' refers to the destination of goods as being within Australia as opposed to exporting them. Excisable fuel products Excisable goods are goods on which excise duty is imposed. Excise duty is imposed on goods that are manufactured or produced in Australia and listed in the Schedule to the Excise Tariff Act. As these guidelines deal with fuel products, we have used the term excisable fuel products. Excisable fuel products include:- petrol
- diesel
- crude petroleum oil
- heating oil
- kerosene
- fuel ethanol, and
- biodiesel.
- the volume of excisable fuel products that you have delivered into the Australian domestic market during the period designated on your PSP, or
- the volume of excisable fuel products that you wish to deliver into the Australian domestic market following approval.
13.7 LEGISLATION (quick reference guide)
In this chapter we have referred to the following legislation:13.7.1 Excise Act 1901
Section 24 - Excisable goods and goods liable to duties of Customs may be used in manufacturing excisable goods Section 25 - Only licensed manufacturers to manufacture excisable goods Section 26 - Licensed manufacturers to manufacture in accordance with Act and licence Section 27 - Licensed manufacturers to manufacture only at licensed premises Section 49 - Facilities to officers Section 50 - Record keeping Section 51 - Collector may give directions Section 52 - Weights and scales Section 58 - Entry for home consumption etc. Section 61 - Control of excisable goods Section 61A - Permission to remove goods that are subject to CEO's control Section 61C - Permission to deliver certain goods for home consumption without entry Section 77H - Blending exemptions Section 77J - Goods that are not covered by subitem 10.25, 10.26, 10.27, 10.28 or 10.30 Section 78 - Remissions, rebates and refunds Section 92 - Seals etc. not to be broken Section 117A - Unlawfully moving excisable goods Section 117B - Unlawfully selling excisable goods Section 120 - Offences13.7.2 Excise Regulations 1925
Regulation 50 - Circumstances under which refunds, rebates and remissions are made13.7.3 Excise Tariff Act 1921
Section 3 - Definitions The Schedule13.7.4 Product Grants and Benefits Administration Act 2000
Section 9 - Registration for entitlement to grants or benefits13.7.5 Product Stewardship (Oil) Act 2000
Section 6 - Definitions13.7.6 Product Stewardship (Oil) Regulations 2000
Regulation 4 - Amount of product stewardship benefit13.7.7 Crimes Act 1914
Section 4AA - Penalty unitsFOOTNOTES
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