Senate

Revised Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)

Chapter 5 - Miscellaneous administrative amendments

Outline of Chapter

5.1 This Chapter makes some miscellaneous administrative amendments to the Diesel and Alternative Fuels Grants Scheme Act 1999 (DAFGSA 1999).

Context of reform

5.2 In developing business processes to implement the Diesel and Alternative Fuels Grants Scheme (Scheme) and through discussions with industry representatives, the Australian Tax Office (ATO) has become aware of a number of administrative difficulties in the current wording of the DAFGSA 1999.

Summary of new law

5.3 The amendments deal with the insertion of the general operational provisions to:

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ensure a grant is only claimed under one entitlement;

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extend the entitlement to vehicles that satisfy the entitlement criteria for some part of the grant period although the vehicle is not registered with the scheme at the time of the claim being made;

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accept registration of additional vehicles at the same time a claim is made in respect of those or other vehicles;

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ensure clients who seek to correct a mistake or omission for a previous claim do not lose their entitlements for both claims;

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provide for the payment of interest to clients on the underpaid amount of fuel grants which are paid or applied against debts as a result of an objection against a fuel grant assessment;

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clarify that journeys between metropolitan areas and non-metropolitan areas are eligible in both directions;

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substitute the existing collection and recovery rules in the DAFGSA 1999 with the standardised rules which apply to tax-related liabilities from 1 July 2000; and

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exclude fuel used in stationary vehicles.

Detailed explanation of new law

Entitlement not lost where vehicle is de-registered

5.4 Section 6B of the DAFGSA 1999 provides that clients are not entitled to a fuel grant in respect of the use, during a grant period, of diesel fuel or alternative fuel in operating a particular vehicle unless registered for entitlement to fuel grants in respect of the vehicle when a claim for payment of the grant was made.

5.5 Section 8A of the DAFGSA 1999 provides for cancellation of registration. If a particular vehicle is cancelled in a claim period, the entity cannot claim for that vehicle. The current legislation does not allow the payment to an entity that is not registered in respect of a vehicle at the time a claim is made in respect of that vehicle. The problem would arise where an entity de-registers a vehicle or itself and then attempts to claim for the period within the grant period for which they were eligible. The claimant should not forfeit their entitlement as a result.

5.6 The entitlement provisions of the DAFGSA 1999 have been amended so that vehicles which satisfy the entitlement criteria for the grant for some part of a grant period, but which are not registered with the Scheme at the time of the claim being made (usually at the end of the grant period) would be eligible for payment for any part of that grant period. [Schedule 1, item 3, new section 6B]

Registration of additional vehicles

5.7 The registration provisions have been amended to accept the registration of additional vehicles at the same time that claims are made in respect of those or other vehicles. The ability to allow simultaneous registrations and claims reduces the number of potential interactions with the ATO, and is closer to the spirit of the Scheme. It also represents a more commonsense approach to situations where:

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vehicles are added close to the end of a grant period;

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registration details may not be known in advance (e.g. hire vehicles); and

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individuals become aware of their entitlement after the commencement of the Scheme.

[Schedule 1, item 3, new section 6B]

Amending a claim

5.8 Under the existing entitlement provisions clients who seek to correct a mistake or omission from a previous claim lose their entitlements for both the original and the amended claim. Section 15(3) of the DAFGSA 1999 provides that a client cannot make more than one claim in respect of a grant period relating to the same type of fuel. Under section 15(3A) if the client contravenes section 15(3) in relation to a particular grant period, they are not entitled, and are taken never to have been entitled, to a fuel grant in respect of that grant period. The amendment will ensure that any client who seeks to correct a mistake will not be treated as if they were seeking to dishonestly manipulate the Scheme and will not lose their entitlement. [Schedule 1, item 9, new subsection 15(3AA)]

5.9 The client may request the Commissioner on the approved form to make an amended assessment and the Commissioner must comply with the request. [Schedule 1, item 11, new section 15EA]

Interest on underpayments

5.10 Interest will be paid to clients on the underpaid amount of fuel grants which are paid, or applied against debts, as a result of an objection against a fuel grant assessment. Part III (sections 9 to 12) of the Taxation (Interest on Overpayments and Early Payments) Act 1983 (T(IOEP)A 1983) provides for the payment of interest to a taxpayer on an amount of relevant tax , which is overpaid as a result of a decision to which that Act applies, in particular, as a result of a successful objection or appeal against, or review, of an assessment (and which is refunded or applied against another tax liability). Amendments are needed to confer an entitlement to interest, in the circumstances listed within the provisions of the DAFGSA 1999. Interest is to be calculated in accordance with section 10 of the T(IOEP)A 1983, from the day on which the original notice of assessment of the fuel grant was issued. [Schedule 1, item 12, new section 16B]

Journeys

5.11 Journeys between metropolitan areas and non-metropolitan areas are eligible in both directions. For a vehicle of 4.5 tonnes or more, but less than 20 tonnes, one of the requirements in section 10 of DAFGSA 1999 is that the fuel must be used, in carrying on an enterprise, in operating the vehicle on a public road in Australia on a journey between a point outside the metropolitan area and a point inside a metropolitan area. It was always the Government's intention that a journey from inside the metropolitan area to a point outside the metropolitan area is also eligible. This amendment clarifies and makes certain that position. [Schedule 1, item 4, new paragraph 10(2)(ba)]

Standardised rules for collection and recovery for tax-related liabilities

5.12 The amendments will promote consistency in the law governing the management of receivables by the ATO and remove the duplication of provisions in laws administered by the Commissioner of Taxation (Commissioner).

5.13 Standardised rules for the collection and recovery of tax-related liabilities that remain unpaid after they become due and payable were inserted in Schedule 1 of the TAA 1953 by the A New Tax System (Tax Administration) Act 1999 . These rules consolidated and replaced the debt recovery provisions contained in various taxation laws.

5.14 The standardised rules were not applied to the Scheme at that time because amendments to the DAFGSA 1999 were being concurrently considered by Parliament. The amendments to the DAFGSA 1999 inserted specific provisions for the recovery of debts arising under the Scheme that duplicated provisions contained in other taxation laws.

5.15 The amendments to be made by this Bill will ensure that a common set of rules will apply to debts arising under the Scheme as they do to debts arising under other laws administered by the Commissioner. [Schedule 1, item 8, new subsection 14A(3) and items 12 to 16]

Only one grant for a particular use of fuel

5.16 A client may only claim an entitlement under one section in relation to the use of diesel fuel or alternative fuel. [Schedule 1, item 5, new section 10AE]

5.17 Subsection 10B of the DAFGSA 1999 provides a statutory formula for calculating the amount of fuel used in a vehicle that is eligible for a grant within a grant period.

5.18 An amendment to subsection 10B is required to ensure that fuel used to operate equipment while the vehicle is stationary (e.g. a mobile crane operating on a construction site) is deducted from the total quantity of fuel before applying the statutory formula. The deduction will only be necessary where the quantity of fuel used while the vehicle is stationary is more than 20% of the fuel used in the vehicle during a grant period. [Schedule 1, item 7A]