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Determinations/Other as made
This determination revokes the Excise (Blending exemptions) Determination 2012 (No. 2). The instrument now includes instances where the replenishment of liquid petroleum gas (LPG) tanks results in a blend containing LPG on which duty has been paid at different rates. The new determination will include an additional circumstance (in paragraph 8) for blends of LPG that occur in any of the following: (i) containers that are capable of containing not more than 210 kilograms of liquefied petroleum gas (LPG); or (ii) tanks at residential premises where the LPG is for residential use and is not for use in carrying on an enterprise; or (iii) a reticulation system for supplying LPG to at least 2 residential premises (whether or not the system also supplies fuel to premises other than residential premises).
Administered by: Treasury
Registered 20 Jun 2012
Tabling HistoryDate
Tabled HR21-Jun-2012
Tabled Senate21-Jun-2012
Date of repeal 01 Jul 2014
Repealed by Excise (Blending exemptions) Determination 2014 (No. 1)

Explanatory Statement

 

Excise Act 1901

Excise (Blending exemptions) Determination
2012 (No. 2)

 

Revocation and replacement of previous instrument

1.            Excise (Blending exemptions) Determination 2012 (No. 2) revokes and replaces Excise (Blending exemptions) Determination 2012 (No. 1)F2012L00913.

2.            The original instrument did not include instances where the replenishment of liquid petroleum gas (LPG) tanks results in a blend containing LPG on which duty has been paid at different rates; where LPG is blended with a quantity of LPG that has received a remission of duty (whole or partial); or where the blend comprises a quantity of duty paid LPG with a quantity that has received a remission. The new determination will include an additional circumstance (in paragraph 8) for blends of LPG that occur in any of the following:

(i)    containers that are capable of containing not more than 210 kilograms of liquefied petroleum gas (LPG); or

(ii)   tanks at residential premises where the LPG is for residential use and is not for use in carrying on an enterprise; or

(iii)  a reticulation system for supplying LPG to at least 2 residential premises (whether or not the system also supplies fuel to premises other than residential premises).

3.         A further requirement for the new exemption circumstance to apply is that the tank in which the blending occurs is not for use in a system for supplying fuel to an internal combustion engine of either a motor vehicle or a vessel, either directly or by filling another tank connected to such an engine. Certain exceptions to the meaning of motor vehicle have been provided for in paragraph 8. 

4.         Aside from this new blending circumstance, the exemptions set out in the previous determination remain unchanged.

 

General outline

5.            This Explanatory Statement is provided in accordance with section 26 of the Legislative Instruments Act 2003.

6.            Excise (Blending exemptions) Determination 2012 (No. 2) is required due to amendments to the Excise legislation effected by the Clean Energy (Charges – Excise) Act 2011, Clean Energy (Excise Tariff Legislation Amendment Act) 2011, Taxation of Alternative Fuels Legislation Amendment Act 2011, Excise Tariff Amendment (Taxation of Alternative Fuels) Act 2011 and Excise Amendment Regulations 2011.

7.         The changes are the result of the amendments of Item 9 of Schedule 1 to the Excise Regulations 1925 and the Schedule to the Excise Tariff Act 1921 with the release of the Clean Energy (Charges – Excise) Act 2011, Clean Energy (Excise Tariff Legislation Amendment Act) 2011, Taxation of Alternative Fuels Legislation Amendment Act 2011 and  Excise Tariff Amendment (Taxation of Alternative Fuels) Act 2011. One of the principal objects of the amendments is to include gaseous fuels, which are liquefied petroleum gas (LPG), liquefied natural gas (LNG) and compressed natural gas (CNG) into the carbon pricing mechanism, the excise system and to provide a remission for LPG and LNG which is used, or delivered for use other, than in an internal combustion engine of a motor vehicle or vessel.[1] 

8.         The instrument is made under section 77H of the Excise Act 1901 (Excise Act) and takes effect from 1 July 2012. The previous instrument commenced on 1 December 2011.

9.         In addition to providing circumstances in which fuel blends are exempt from excise manufacture, section 77H of the Excise Act gives power to the CEO (i.e. the Commissioner of Taxation) to specify by legislative instrument, other circumstances in which fuel blends are taken not to be goods covered by paragraph 10(g) of the Schedule to the Excise tariff Act 1921 and therefore not subject to duty.

 

Date of effect

10.       This determination commences on 1 July 2012.

 

Effect of the instrument

11.       The determination specifies circumstances in which blends of excisable fuels, with or without other substances, are taken not to be excisable goods. Excise duty is therefore payable on the components of these blends (where applicable), but not on the blends themselves.

12.       Compliance cost impact:  Low – minor or machinery in nature.  The instrument will affect only a small proportion of businesses.  There is no ongoing compliance cost impact and a low implementation impact reflecting the need for some taxpayers to be aware of the change and make some minor adjustments to their processes.

 

13.       Item 8(a) provides an exemption for two-stroke petrol.

14.       Item 8(b) exempts incidental blending within a storage tank or a vehicle’s fuel tank. This exemption applies where there is no intention to benefit from the blend as such and practical considerations prevent the complete emptying of a tank of a relatively small quantity of product before filling it with the same product or another product. It is a matter of fact and degree whether the contents of a tank should be regarded as ‘remnants’ and therefore whether the resulting blend should be regarded as an ‘incidental’ blend.  

15.       Item 8(c) provides an exemption for stabilised crude petroleum oil. Stabilised crude petroleum oil used in an oil refinery in refining (not in an internal combustion engine) is excluded from the Excise tariff under paragraph 10(a) and is therefore not dutiable. A blend of such stabilised crude petroleum oil and diesel or biodiesel is appropriately excluded from paragraph 10(g) and duty is therefore payable only on the diesel or biodiesel component.

16.       Item 8(d) provides an exemption for eligible goods on which duty has been paid that are blended with a dye.

17.       Item 8(e) provides an exemption for eligible goods on which duty has been paid which are blended with prepared additives that:

(i)    enhance the performance of an internal combustion engine or assist in its maintenance, and

(ii)   are not methanol or eligible goods (or their imported equivalents),

and are packaged into packages of not more than 10 litres capacity;

18.       Item 8(f) provides an exemption for eligible goods on which duty has been paid which are blended with one or more specified additives, being additives that are packaged into packages of at least 10 litres capacity.

19.       Item 8(e) and item 8(f) relate to the addition of certain kinds of performance enhancing or engine maintenance additives to fuel.

20.       Item 8(g) provides an exemption for blending amounts of LPG when the following apply:

(i)    any applicable excise duty or an excise equivalent duty of Customs that is payable on each quantity of the LPG has been paid;

      and

(ii)  the blending occurs:  

(a)  in a container that is capable of containing not more than 210 kilograms of LPG; or

(b)  in a tank at residential premises and the resultant blend is not for use in carrying on an enterprise; or

(c)  in a tank that is for use in a system for supplying LPG to at least 2 residential premises (whether or not the system also supplies fuel to premises other than residential premises)

and

(iii) the tank in which the blending occurs is not for use in a system for supplying fuel to an internal combustion engine of either a motor vehicle or a vessel, either directly or by filling another tank connected to such an engine.

For the purposes of (iii), the term motor vehicle does not include a vehicle that is designed merely to move goods with a forklift and is for use primarily off public roads, or a vehicle of a kind prescribed by the regulations for the purposes of paragraph 41-10(4)(b) of the Fuel Tax Act 2006.

 

 

Impact of the instrument

21.       Together with the provisions for blends already made in subsection 77H(1), the determination ensures that former exemptions are maintained as required and that a new exemption is made in prescribed circumstances for blends of LPG.  These blends covered by the amendment involve blends of LPG where duty has been paid at different rates on the constituents of the blend; where LPG is blended with a quantity of LPG where either quantity has received a remission of duty (whole or partial); and where the blend comprises a quantity of duty paid LPG with a quantity that has received a remission. The prescribed circumstances only extend to blends in tanks of not more than 210 kilograms, and will only cover larger tanks where those tanks are at residential premises or are used in a system for providing LPG to 2 or more residences. This provides greater certainty in relation to excise obligations around the blending of fuels.

 

Consultation

22.       Consultations on the determination took place with major industry representatives through direct contact with affected entities. No comments were received that indicated the proposals in the draft determination should not proceed.

23.       Consultation was undertaken with the Revenue Analysis Branch and no monetary, financial or revenue impacts resulting from or associated with this determination were identified.

24.       The Treasury have been consulted and do not have any issue with the determination.

 

Statement of compatibility prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

25.       This legislative instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

26.       This legislative instrument revokes and replaces Excise (Blending exemptions) Determination 2012 (No. 1)F2012L00913. The instrument specifies circumstances in which blends of excisable fuels, with or without other substances, are taken not to be excisable goods.

 

Human rights implications

27.       This legislative instrument does not engage any of the applicable rights or freedoms.

 

Conclusion

28.       This legislative instrument is compatible with human rights as it does not raise any human rights issues.

 

 

 

 

James O’Halloran

Deputy Commissioner of Taxation

15 06 2012

 

 

Previous draft:

 

Related Rulings/Determinations:

Fuel Tax (Fuel Blends) Determination 2012 (No. 1)

Fuel Tax (Fuel Blends) Determination 2006 (No. 3)

 

 

Subject references:

Excise

Excise tariff

Fuel blending

Exempt blends

 

Legislative references:

Excise Act 1901 section 77H (as at 1July 2012)

Excise Act 1901 paragraph 77H(1)(a)

Excise Act 1901 paragraph 77H(1)(b)

Fuel Tax Act 2006 section 95-5

 

Other references:


 

ATO references  

NO:

 

ISSN:

 

 



[1] There are no remission circumstances for CNG uses as an exemption from excise duty under Section 77HA of the Excise Act is available for prescribed circumstances.