House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for the Environment, the Honourable Sussan Ley MP)

Excise Tariff Amendment Bill 2020

Notes on Clauses

Clause 1 - Short title

1. This clause provides that the short title by which the Act may be cited is the Excise Tariff Amendment Act 2020.

Clause 2 - Commencement

2. This clause provides that the Act will commence on the day after receiving the Royal Assent.

Clause 3 - Schedule

3. This clause provides that legislation specified in a Schedule is amended or repealed as set out in the Schedule and other items in the Schedule have effect according to their terms.

SCHEDULE 1

Item 1 - Schedule (table item 15 to subitem 15.4)

4. Item 1 repeals item 15 of the Schedule to the Excise Tariff Act 1921 (Excise Tariff Act) and substitutes it with an updated item 15. The effect of the amendment is to ensure that diesel, blends of diesel and other products for use as a fuel or that are ordinarily used as a fuel are not subject to excise duty under item 15 but rather are exclusively subject to duty under item 10 of the Schedule unless an exclusion applies.

5. Under the amendments all item 15 lubricant/fluid/oil products (but not fuels) and greases continue to be subject to excise duty at a rate of $0.085 cents per litre or $0.085 cents per kilogram for greases.

6. Item 15.1 applies to petroleum based oils that are lubricant/fluid/oil products and the synthetic equivalents of such oils but not greases.

7. Item 15.2 applies to petroleum based oils that are lubricant/fluid/oil products or greases or synthetic equivalents of such oils that are recycled for use as oils that are lubricant/fluid/oil products but not recycled for use as greases.

8. Item 15.3 applies to petroleum based greases and their synthetic equivalents.

9. Item 15.4 applies to petroleum based oils that are lubricant/fluid/oil products or greases and synthetic equivalents of such oils recycled for use as greases.

Item 2 - Application provisions

10. Under subitem 2(1), the amendments to the Excise Tariff Act apply to goods entered for home consumption on or after the day the Bill for the Excise Tariff Amendment Act is introduced into the House of Representatives. This ensures that the Excise Tariff Amendment Act 2020 applies as soon as practical to clarify the operation of the excise law and remove liability to excise on products such as diesel which were held to be oils under the PSO Act by the Federal Court and therefore subject to a benefit under the PSO Scheme. This application provision is beneficial to affected parties as it narrows the scope of oils and therefore removes excise duty liability for certain uses of products such as diesel. The amendment is consistent with the original policy intent that diesel is not considered to be an oil and hence was not intended to qualify for a benefit under the PSO Scheme.

11. Subitem 2(2) clarifies that the amendments in Schedule 1 apply to goods entered for home consumption on or after the date of introduction of the Bill despite the operation of subsection 5(2) of the Excise Tariff Act 1921.