Explanatory Memorandum
Circulated by authority of the Minister for Infrastructure, Transport, Regional Development and Local Government the Honourable Anthony Albanese, MP and the Treasurer the Honourable Wayne Swan MP and the Minister for Home Affairs the Honourable Brendan O'Connor MPOUTLINE
Increased Aviation Fuel Excise
The purpose of these Bills is to amend the Excise Tariff Act 1921 and the Customs Tariff Act 1995 to alter the excise and customs duty applying to aviation fuel from $0.02854 per litre to $0.03556 per litre from 1 July 2010.
In the May 2010 Budget the Government announced an increase in aviation safety funding through an increase in the aviation fuel excise to fund critically important safety activities to be implemented by the Civil Aviation Safety Authority (CASA), Australia's aviation safety regulator, and address a long-term shortfall in funding of CASA. These activities include continued random testing for alcohol and other drugs within the aviation industry; developing and maintaining safety standards; regulating expanding areas of aviation activity; and implementing a state safety program. The increased funding will also enable CASA to strengthen their technical capability and regulatory oversight ability and expand technical training capacity for its technical staff.
The increase is $0.00702 per litre. This will translate to an additional $89.9 million of CASA funding over four years.
Date of Effect: 1 July 2010.
Financial Impact Statement
As per the May 2010 Federal Budget, this measure will result in an additional $89.9 million for CASA over the four financial years from 1 July 2010 to 30 June 2014.
| Expense ($m) | |||||
| 2009-10 | 2010-11 | 2011-12 | 2012-13 | 2013-14 | |
| Civil Aviation Safety Authority | - | 23.1 | 22.6 | 22.1 | 22.1 |
| Related revenue ($m) | |||||
| Australian Taxation Office and Australian Customs and Border Protection Service | - | 20.7 | 21.8 | 22.9 | 24.6 |
Compliance cost impact: Minor transitional compliance and administration costs are expected from this rate change.
Context of Amendments
1 Excise is a tax on certain goods produced in Australia including alcohol (other than wine), tobacco and fuel. Imported goods comparable to those subject to excise, known as 'excise-equivalent goods', attract customs duty that includes a component at the same rate as the excise rate so that imports and locally-produced goods are taxed in an equivalent fashion. This component is commonly referred to as 'excise-equivalent customs duty'.
2 In the 2010 Federal Budget the Government announced an increase in the excise rate applying to aviation fuel, and the relevant excise-equivalent customs duty rates applying to the equivalent imported products, by $0.00702 per litre, applying on and from 1 July 2010. This equates to an increase from $0.02854 per litre to $0.03556 per litre.
3 These amendments increase the rate for items 10.6 and 10.17 of the Schedule to the Excise Tariff Act 1921 and the relevant rates in the Customs Tariff Act 1995.
Summary of New Law
4 The Excise Tariff Amendment (Aviation Fuel) Bill 2010 changes the Schedule to the Excise Tariff Act 1921 to increase the rate in items 10.6 and 10.17 from $0.02854 per litre to $0.03556 per litre for aviation gasoline and aviation kerosene respectively. The Customs Tariff Amendment (Aviation Fuel) Bill 2010 amends Schedule 3 to the Customs Tariff Act 1995 so that the rates in the Schedule accord with changes to the Schedule to the Excise Tariff Act 1921.
Comparison of Key Features of New Law and Current Law
| New law | Current law |
| Excise duty rate | |
| Item 10.6 of the Schedule to the Excise Tariff Act 1921 has a rate of $0.03556 per litre. | Item 10.6 of the Schedule to the Excise Tariff Act 1921 has a rate of $0.02854 per litre. |
| Item 10.17 of the Schedule to the Excise Tariff Act 1921 has a rate of $0.03556 per litre. | Item 10.17 of the Schedule to the Excise Tariff Act 1921 has a rate of $0.02854 per litre. |
| Excise-equivalent customs duty rate | |
| Subheadings 2710.11.61, 2710.91.61 and 2710.99.61 in Schedule 3 to the Customs Tariff Act 1995 have rates of $0.03556 per litre. | Subheadings 2710.11.61, 2710.91.61 and 2710.99.61 in Schedule 3 to the Customs Tariff Act 1995 have rates of $0.02854 per litre. |
| Subheadings 2710.19.40, 2710.91.40 and 2710.99.40 in Schedule 3 to the Customs Tariff Act 1995 have rates of $0.03556 per litre. | Subheadings 2710.19.40, 2710.91.40 and 2710.99.40 in Schedule 3 to the Customs Tariff Act 1995 have rates of $0.02854 per litre. |
Detailed Explanation of New Laws
5 These Bills seek to legislate the increased rates of aviation fuel excise and excise-equivalent customs duty.
6 Aviation gasoline for use as fuel in aircraft is classified in item 10.6 and aviation kerosene is classified in item 10.17 of the Schedule to the Excise Tariff Act 1921.
7 The amendments set out in the Excise Tariff Amendment (Aviation Fuel) Bill 2010 alters the Schedule to the Excise Tariff Act 1921 to increase the rate applicable under items 10.6 and 10.17 from $0.02854 per litre to $0.03556 per litre . [Schedule 1, items 1 to 2 of the Excise Tariff Amendment (Aviation Fuel) Bill 2010]
8 Imported aviation gasoline and aviation kerosene are classified under several subheadings in Schedule 3 to the Customs Tariff Act 1995 (the Customs Tariff). The subheadings that receive equivalent tax treatment to item 10.6 (aviation gasoline) of the Schedule to the Excise Tariff Act 1921 are: 2710.11.61, 2710.91.61 and 2710.99.61. The subheadings that receive equivalent tax treatment to item 10.17 (aviation kerosene) of the Schedule to the Excise Tariff Act 1921 are: 2710.19.40, 2710.91.40 and 2710.99.40.
9 Additionally, Schedules 5, 6, 7 and 8 to the Customs Tariff specify rates of duty for certain goods, including aviation fuel, imported under the Australia-US Free Trade Agreement, the Thai-Australia Free Trade Agreement, the Australia-Chile Free Trade Agreement and the ASEAN-Australia-New Zealand Free Trade Agreement, respectively. The Bill amends the relevant items in these Schedules so that the increased rates of duty apply to the aviation fuel when imported under these Free Trade Agreements.
10 Schedule 1 of the Customs Tariff Amendment (Aviation Fuel) Bill 2010 amends the Customs Tariff to increase customs duty rates for aviation gasoline and aviation kerosene by $0.00702 per litre, from $0.02854 to $0.03556 per litre.
11 Additionally, Schedule 3 to the Customs Tariff Act 1995 is altered by the Customs Tariff Amendment (Aviation Fuel) Bill 2010 so that the relevant rates of excise-equivalent customs duty accord with changes to the Schedule to the Excise Tariff Act 1921. [Schedule 1, items 1 to 6 of the Customs Tariff Amendment (Aviation Fuel) Bill 2010]
12 The Bill also amends rates of duty for the items in Schedules 5, 6, 7 and 8 of the Customs Tariff Act 1995 that correspond to the above subheadings in Schedule 3. These amendments to the Customs Tariff Act 1995 ensure that the excise equivalent component of customs duty on imported aviation fuel is the same as the rates of excise duty applicable to this product when produced in Australia and will apply to goods when imported from all countries . [Schedule 1, items 7 to 30 of the Customs Tariff Amendment (Aviation Fuel) Bill 2010]
Application and transitional provisions
13 In accordance with Section 2 of the Excise Tariff Amendment (Aviation Fuel) Bill 2010, the excise tariff amendments will commence on 1 July 2010.
14 The amendments to the Customs Tariff Act 1995 will also commence on 1 July 2010. In addition, the amendments apply to goods entered for home consumption on or after 1 July 2010 and to goods that have been imported into Australia before that date where the time for working out the rate of import duty on the goods had not occurred before that date. For example, this application provision will apply to goods that were warehoused on importation before 1 July 2010 and not entered into home consumption until on or after that date . [Schedule 1, item 31 of the Customs Tariff Amendment (Aviation Fuel) Bill 2010]