House of Representatives

Explanatory Memorandum

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

Chapter 4 - Other amendments

Outline of chapter

4.1 Schedule 1, Part 5, amends the provisions of the Excise Tariff Act 1921 that set out the method of determining the duty payable on excisable blended petroleum products to allow previously paid duties to be deducted in the formula for calculating duty on gasoline/fuel ethanol blends.

Context of amendments

4.2 Blending of excisable petroleum products is treated as manufacture under the Excise Act 1901 and must be carried out with an excise manufacturer's licence. Since 1994 certain blending has been prescribed as exempt from these requirements, generally where the blending is incidental, non-commercial and does not represent a revenue risk. Blends of duty paid petrol and fuel ethanol have been exempt under these arrangements. However, this treatment of duty paid petrol and fuel ethanol blending is now inconsistent with the treatment of other commercial fuel blending and the prescribed exemption is to be removed. When the exemption is removed, the excise duty payable on these blends will be calculated under the provisions of the Excise Tariff Act 1921 formula. As these blends involve duty paid petrol it will be necessary to allow for previously paid duties to be deducted. This is consistent with the formula for calculating duty on other fuel blends.

Detailed explanation of new law

4.3 The amendments repeal the subsection 6G(2) formula that provides for the excise duty to be determined on gasoline/ethanol blends as the sum of the volume of gasoline at the gasoline rate and the volume of ethanol at the ethanol rate and substitute a similar formula with the addition of the capacity to deduct previously paid duties. [Schedule 1, Part 5, item 31]

The amendments define 'previously paid duties', which includes both customs and excise duties. [Schedule 1, Part 5, item 32]

Application and transitional provisions

4.4 Schedule 1, Part 5, commences on the day on which this bill receives Royal Assent. If the Excise Tariff Amendment Bill (No. 1) 2003 commences, or has commenced, the provisions do not commence and are taken never to have commenced.