Excise guidelines for the fuel industry
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01 INTRODUCTION
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.
It provides a general introduction to excise as it relates to fuel products . Further detail on the matters discussed is contained in later chapters.
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 [2] and the Excise Act 1901 (Excise Act) 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 [3] (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." [4]
Excise imposed by the Excise Tariff Act is imposed on goods dutiable under the Schedule to the Excise Tariff Act (Schedule) 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 Regulation 2015 (Excise Regulation).
To change the Excise Tariff Act requires an amending Act to be passed through Parliament. There are parliamentary procedures which allow for the modification of the Excise Tariff so that the changes can be implemented immediately. These procedures are known as Tariff Proposals.
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.
Imposition of Excise Duty
Section 5 of the Excise Tariff Act imposes excise duty on goods that are listed in the Schedule and manufactured or produced in Australia. Excise duty is imposed at the time of manufacture or production of the relevant goods. The Schedule lists the various goods that are subject to excise and the rate of duty applicable. It is sometimes referred to as the Excise Tariff.
The schedule of excisable goods and the duty rates
The Schedule is a table that lists the goods that are subject to excise duty (if those goods are manufactured or produced in Australia). The goods that are currently subject to excise fall within three broad groups:
- alcoholic beverages (other than wine) and spirits
- cigarettes and other tobacco products, and
- fuel and oils.
Within those three broad groups the schedule provides eight different items and those items are (in most cases) further broken down into subitems. The table contains a description of the items and subitems and provides the rate of duty applicable to them.
The following is an extract from the fuel products section of the table:
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) | $0.389* per litre |
| 10.6 | Gasoline for use as fuel in aircraft | $0.03556* per litre |
10.10 | Diesel (other than biodiesel) | $0.389* per litre | |
10.21 | Biodiesel | $0.389* per litre | |
*Rate of duty as at 1 April 2015. For the current rates of duty, refer to the Schedule under Excise Tariff Working Pages on the Excise Rates page on our website.
We use the term fuel however goods that are not ultimately used as a fuel (in transport or for combustion) are also captured by the Schedule. There are generally no end use provisions and as a result goods like paint thinners are classified to the Schedule even though they are not used as a fuel.
This manual does not cover stabilised crude petroleum oil or condensate classified to items 20 and 21 respectively in the Schedule of the Excise Tariff Act.
Indexation of the duty rate
The rates of excise are set out in the Schedule. However, section 6A provides that the rates of duty may increase every six months (generally 1 February and 1 August). The amount of any increase is calculated by reference to the All Groups Consumer Price Index published quarterly by the Australian Bureau of Statistics.
These increases are commonly referred to as indexation. We publish these in the Commonwealth Gazette and, for ease of reference, we provide a 'working tariff' which shows an up to date rate taking account of the indexation increases.
Indexation increases also apply to rates set under a tariff proposal.
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. [5]
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.
Fuel products became subjected to the twice yearly indexation increases when Excise Tariff Proposal (No.1) 2014 was introduced to the Parliament in October 2014 (there was a similar tariff proposal introduced for excise equivalent customs duty).. This resulted in duty rates for fuel (other than aviation fuel) increasing on 10 November 2014 and indexation applying in February and August 2015. The tariff proposal must be ratified by the Parliament with 12 months for indexation on fuel to continue.
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.
The Excise Act requires that fuel not be manufactured outside our control. This is to ensure that the correct amount of duty is ultimately paid or the fuel is otherwise satisfactorily dealt with. This is achieved by making various activities unlawful and allowing us to grant licences and permission to people to carry on those otherwise unlawful activities.
Manufacture, storage and movement of excisable fuel products
Before you can manufacture fuel products you need a manufacturer licence granted under the Excise Act. [6] Under this licence you are also permitted to store like products that you did not manufacture.
You also need a storage licence granted under the Excise Act to store fuel products. [7]
Before you can remove excisable fuel products on which duty has not been paid, you need permission granted under the Excise Act. [8]
Generally we will not grant permission to move excisable fuel products on which duty has not been paid to a place that is not covered by either a manufacturer licence or a storage licence or unless the place is a wharf or airport and the goods are for export.
Payment of duty for excisable fuel products
The Excise Tariff Act imposes duty when excisable fuel products are manufactured. The Excise Act specifies when the duty must be paid, how and what you must report to us, the relevant time to determine the rate of duty in force, and provides a mechanism to require payment where duty has not been correctly accounted for on excisable fuel products.
In general terms, duty must be paid on the goods before they are delivered from licensed premises (other than being delivered to another licensed premises). Permission may be granted to deliver the goods prior to paying the duty.
1.3.3 Excise Regulation
The Excise Regulation set out provisions in relation to excisable goods such as:
- refunds and remissions, and
- drawbacks.
1.4 WHO ADMINISTERS EXCISE?
The Commissioner of Taxation has the general administration of the Excise Act and the Excise Tariff Act. [9] 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.
However as most bulk imported fuel is blended in Australia with other fuel when transferred into storage tanks, the fuel is considered to be manufactured in Australia and as a result the duty liability transfers from the customs regime into the excise regime.
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
- need a refund, remission or drawback of excise duty.
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 137 290
- fax 1300 130 916 ,
- email us at ATO-EXC-Petroleum@ato.gov.au , or
- write to us at
Australian Taxation Office
PO Box 3514
ALBURY NSW 2640
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.
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
- condensate
- heating oil
- kerosene
- liquid hydrocarbon solvents
- fuel ethanol
- biodiesel
- compressed natural gas (CNG)
- liquefied natural gas (LNG), and
- liquefied petroleum gas (LPG).
This manual does not cover stabilised crude petroleum oil or condensate classified to items 20 and 21 respectively in the Schedule of the Excise Tariff Act.
1.8 LEGISLATION (quick reference guide)
In this chapter, we have referred to the following legislation:
1.8.1 Excise Act 1901
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 action
1.8.2 Excise Tariff Act 1921
Section 1A - General administration of Act
Section 6A - Indexation of rates of duty
1.8.3 Commonwealth of Australia Constitution
Section 90 - Exclusive power over customs, excise, and bounties
| Date: | Version: | |
| 1 July 2006 | Original document | |
| You are here | 1 April 2015 | Updated document |
| 12 July 2017 | Updated document | |
| 11 December 2017 | Updated document | |
| 4 June 2021 | Updated document | |
| 1 July 2024 | Current document |