Tax Laws Amendment (2012 Measures No. 5) Bill 2012

Bills Digest no. 34 2012–13

PDF version  [664KB]

WARNING: This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

Bernard Pulle
Economics Section
26 October 2012

Contents
Purpose
Committee consideration
Schedule 1—Conservation tillage refundable tax offset
Schedule 2—Mature age worker tax offset
Schedule 3—Compliance regime for gaseous fuels
Schedule 4—Fuel blending exemptions
Schedule 5—Deductible gift recipients
Schedule 6—Wine equalisation tax
Producer rebates
Attachment A

 

Glossary

Abbreviation

Definition

ATO

Australian Taxation Office

CNG

compressed natural gas

Commissioner

Commissioner of Taxation

DGR

deductible gift recipients

Excise Act

Excise Act 1901

Excise Tariff Act

Excise Tariff Act 1921

Fuel Tax Act

Fuel Tax Act 2006

ITAA 1997

Income Tax Assessment Act 1997

LNG

liquefied natural gas

LPG

liquefied petroleum gas

MAWTO

mature age worker tax offset

TAA 1953

Taxation Administration Act 1953

WET

wine equalisation tax

WET Act

A New Tax System (Wine Equalisation Tax) Act 1999

Date introduced:  19 September 2012
House:  House of Representatives
Portfolio:  Treasury
Commencement:  This Act commences on the day it receives the Royal Assent. The commencement and application of the measures in each Schedule is indicated in the key provisions section of this Bills Digest.

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill's home page, or through http://www.aph.gov.au/Parliamentary_Business/Bills_Legislation. When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the ComLaw website at http://www.comlaw.gov.au/.

Purpose

There are six Schedules to this Bill and the purpose of the measures in each Schedule is briefly as follows.

Schedule 1 amends the definition of ‘eligible no-till seeder’ in section 385-235 of the Income Tax Assessment Act 1997 (ITAA 1997) to ensure that an eligible no-till seeder can comprise either the tool alone or the combination of the cart and the tool. This will enable the refundable tax offset for conservation tillage to be claimed on the tool alone or the combination of the cart and the tool.

Schedule 2 amends the ITAA 1997 to phase out the mature age workers tax offset (MAWTO) from 1 July 2012 for taxpayers born on or after 1 July 1957.

Schedule 3 amends the Excise Act 1901 to introduce a compliance regime to accommodate the taxation under that Act of gaseous fuels, namely, liquefied petroleum gas (LPG), liquefied natural gas (LNG) and compressed natural gas (CNG).

Schedule 4 amends the Excise Act 1901 and the Excise Tariff Act 1921 to clarify when the Commissioner of Taxation can, by legislative instrument, state the circumstances when the creation of certain fuel blends is not treated as excise manufacture.

Schedule 5 amends the ITAA 1997 to include The Diamond Jubilee Trust Australia as a deductible gift recipient (DGR), applicable to gifts made after 31 October 2012 and before 1 July 2015.

Schedule 6 amends the A New Tax System (Wine Equalisation Tax) Act 1999 (WET Act) to ensure that the WET producer rebate cannot be claimed more than once on a single quantity of wine.

Committee consideration

Parliamentary Joint Standing Committee on Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011, the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible.[1]

The Parliamentary Joint Committee on Human Rights (Parliamentary Human Rights Committee) has reviewed the Bill and commented on some issues raised in Schedules 2, 3 and 6 of the Bill.[2] The Parliamentary Human Rights Committee’s comments are canvassed below in the discussion on the relevant Schedules.

Schedule 1—Conservation tillage refundable tax offset

Background

To support action to reduce greenhouse gases in the farming industry, as part of the Government’s Clean Energy Future Plan, the ITAA 1997 was amended to provide a tax offset to encourage no-till farming practices.

Subdivision 385-J of the ITAA 1997, in consequence, provides a 15 per cent refundable tax offset on the purchase of new eligible conservation tillage equipment between 1 July 2012 and 30 June 2015.

To qualify for the offset, under current law, it is necessary to purchase the equipment which comprises the no-till seeder as well as the cart which simply carries the seed and the fertiliser. With the requirement to purchase both the tool and the cart there appears to have been little incentive for primary producers to utilise the offset.

On 29 June 2012, the Assistant Treasurer announced that the law would be amended to enable primary producers, who purchase only the tool, to qualify for the tax offset.[3]

Financial impact

The Explanatory Memorandum states that the financial impact of this measure is not zero, but rounded to zero, in each of the income years 2012–13 to 2015–16.[4] As this measure is expected to result in additional claims being made by eligible taxpayers there will be a cost to revenue. However, the amount of this loss is expected to be negligible in each of the income years 2012–13 to 2015–16. In terms of presentation in a budget context the amounts have been rounded to zero as is the normal practice for amounts that are too small to be rounded to $1 million.

Key provisions

Section 385-235 provides that an eligible no-till seeder is a no-till seeder, comprising the combination of cart and tool. Item 1 of Schedule 1 inserts the words ‘the tool or’ after the word ‘comprising’ in section 385-235, so that an eligible no-till seeder includes either the tool or the combination of cart and tool.

Commencement and Application

Item 2 in the table in clause 2 of the Bill states that Schedule 1 commences on the day this Act receives the Royal Assent.

Item 2 of Schedule 1 provides that the amendment made by this Schedule applies to each of the income years 2012–13, 2013–14 and 2014–15.

Schedule 2—Mature age worker tax offset

Background

Subdivision 61-K of the ITAA 1997 deals with the mature age worker tax offset (MAWTO) and it provides that an Australian resident who is aged 55 or over at the end of the income year and who has worked during the year is entitled to a tax offset.

The amount of the offset, up to a maximum of $500, depends on the amount of net income from working. The offset is reduced under a formula set out in section 61-565, at the rate of five cents per dollar for each dollar of net income from working above $53 000. In consequence, the offset of $500 is completely phased out when the net income from working reaches $63 000.

The net income from working is basically the total amount of assessable income arising as a reward for personal efforts or skills, less any relevant deductions.

In the 2012–13 Budget, the Australian Government announced that it would phase out the MAWTO from 1 July 2012 for taxpayers born on or after 1 July 1957. However, access to the MAWTO will be maintained for taxpayers who are aged 55 years or older in 2011–12.[5]

Financial impact

The Explanatory Memorandum states that this measure provides savings of $255 million over the forward estimates period as shown in the table below.[6]

2012–13

2013–14

2014–15

2015–16

-

$40.0m

$85.0m

$130.0m

Key provisions

Section 61-560 of Subdivision 61-K of the ITAA 1997 currently provides that the entitlement to the MAWTO is restricted to an Australian who is aged 55 or over at the end of the income year.

Items 1, 2 and 3 of Schedule 2 amend sections 61-550, 61-555 and 61-560 respectively, so that the entitlement to the MAWTO is restricted to a person born on or before 30 June 1957.

Although the Statement of Compatibility with Human Rights for Schedule 2 of the Bill asserts that no human rights issues are raised by that Schedule, the Parliamentary Joint Committee on Human Rights observed that the Schedule draws ‘an arguable distinction based on age because it restricts eligibility for the MAWTO on the basis of when an individual turns 55’.[7]

Accordingly, the Committee proposed to seek the Treasurer’s advice on whether Schedule 2 is consistent with the right to non-discrimination in article 26 of the International Covenant on Civil and Political Rights (ICCPR))[8], before forming a view on whether the Bill is compatible with human rights.[9]  

Commencement and Application

Item 2 in the table in clause 2 of the Bill states that Schedule 2 commences on the day this Act receives the Royal Assent.

Item 4 of Schedule 2 provides that the amendments made by this Schedule apply to assessments for the 2012–13 income year and later income years.

Schedule 3—Compliance regime for gaseous fuels

Background

In 2011, certain alternative fuels used for transport purposes were brought into the fuel taxation regime and made subject to excise duty or excise-equivalent customs duty by a package of four Acts which received the Royal Assent on 29 July 2011.[10] This package of four Acts is generally referred to as the alternative fuels legislation.

The fuels covered by the alternative fuels legislation are liquefied petroleum gas (LPG), liquefied natural gas (LNG) and compressed natural gas (CNG), which are generally referred to as gaseous fuels. The taxation rates for these fuels are based on the energy content of the specific fuels and discounted by 50 per cent to reflect the potential benefits of these alternative fuels. The changes are phased in over a transition period to allow affected parties time to adjust to the changes. Further details of the purpose of the alternative fuels legislation are in the Explanatory Memorandum to the related Bills.[11]

Basis of policy commitment to a compliance regime for gaseous fuels

The Explanatory Memorandum to the Bill states that the amendments in Schedules 3 and 4 are technical in nature and ensure that the 2011 alternative fuels legislation works as intended. It adds that the introduction of these measures has not been announced previously.[12]

The necessity for a compliance regime arises because, unlike the regime apply to liquid fuels, which are taxed before leaving licenced premises, gaseous fuels are not required to be taxed before they may be removed from licenced premises. The market therefore contains both taxed and untaxed gaseous fuel.

The Australian Taxation Office website has a fact sheet which sets out the fuel tax credits applicable from 1 July 2012 to gaseous fuels.  It carries the warning that fuel tax credits cannot be claimed for gaseous fuels used in any vehicle travelling on a public road in most circumstances, and a taxpayer cannot claim tax credits for gaseous fuels used for non-transport purposes.[13] This website also emphasises the importance of keeping good records of fuel usage and the need to show the types of fuel that were acquired and what activities each fuel was used for, such as whether it was used in on-road or off-road activities.

The Explanatory Memorandum states that as the Australian market contains both taxed and untaxed gaseous fuels, including fuels stored on unlicensed premises, new compliance measures are required to ensure the integrity of the excise regime. These measures have provisions for requiring notices when supplying untaxed fuel, keeping and producing records of untaxed fuel stocks and uses, and provisions for access by Australian Taxation Office (ATO) and Australian Customs and Border Protection Services (Customs) officers to licensed and unlicensed premises. The compliance regime also includes penalty and offence provisions.[14]

Financial impact

The Explanatory Memorandum to the Bill states that the financial impact of the measures in Schedule 3 and Schedule 4 is nil.[15]

Key provisions

Amendments to the Excise Act 1901

Definition of ‘dutiable fuel use’

Item 2 of Schedule 3 inserts a definition of ‘dutiable fuel use’ in relation to gaseous fuel in subsection 4(1) of the Excise Act 1901 (the Excise Act).[16] It means the use of gaseous fuel in a motor vehicle or a vessel but does not include the use of LPG or LNG in a motor vehicle or vessel prescribed by regulations or CNG that is exempted under section 77HA of the Excise Act.

Definition of ‘fuel tax relief’

Item 4 of Schedule 3 inserts a definition of ‘fuel tax relief’ into subsection 4(1) of the Excise Act. It means:

(a)    a remission or refund of excise duty that applies to gaseous fuel under regulations made under section 78 of the Excise Act and covering gaseous fuel used or intended to be used in an internal combustion engine of a motor vehicle or a vessel

(b)   an exemption from excise duty that applies to gaseous fuel under section 77HA or 77HB of the Excise Act

(c)    a refund of excise duty applicable to gaseous fuel under regulations made under section 78 because of the exemption of gaseous fuel from excise duty under section 77HA or 77HB or

(d)   a remission or refund of Customs duty applicable to gaseous fuel under section 163 of the Customs Act 1901.

Section 78 of the Excise Act deals with the ability of the Commissioner of Taxation, (the CEO as referred to in the Excise Act), to approve remissions, refunds and rebates of excise duty under regulations.

Section 77HA deals with the conditions under which CNG is exempt from excise duty. Paragraph 77HA(1)(c) currently deals with the exemption of CNG used in forklift trucks. Item 9 of Schedule 3 repeals and replaces this paragraph by proposed paragraph 77HA(1)(c) to ensure that forklift trucks are not treated as motor vehicles, so that fuel used in a forklift truck is treated as non-transport use of gaseous fuel.

The current section 77HB is being repealed and substituted by a proposed section 77HB by item 10 of Schedule 3. Proposed section 77HB provides that LPG or LNG used by a licensed manufacturer as part of a process of manufacturing petroleum condensate, stabilised crude petroleum oil, LPG, LNG or other hydrocarbons and not used in an internal combustion engine is exempt from excise duty.

Record keeping requirements for suppliers and users of gaseous fuels

Item 14 of Schedule 3 inserts proposed section 77LA to provide that a person must keep records of all supplies of gaseous fuel in the course of carrying on an enterprise. This requirement is limited to the supply of gaseous fuel in or into a tank with a capacity of more than 210 kilograms, when fuel tax relief applies to the gaseous fuel (proposed subsection 77LA(1)).

The record keeper must retain those records for at least five years after the completion of the transactions or other acts to which they relate (proposed subsection 77LA(2)).

The records must be in English or readily accessible and convertible into English (proposed subsection 77LA(3)).

Proposed subsection 77LA(5) provides that failing to keep, retain or produce a record as required is an offence, punishable by a maximum penalty of 30 penalty units.[17] This is an offence of strict liability (see proposed subsection 77LA(6)). This means that a fault element does not have to be satisfied, but that a person cannot be held liable if he, or she, had an honest and reasonable belief that they were complying with relevant obligations.[18]

The imposition of strict liability for the offence at subsection 77LA(5) appears to be consistent with the Guide to Framing Commonwealth Offences, which specifies that strict liability ‘may be justified where its application is necessary to protect the general revenue’.[19]

The Statement of Compatibility with Human Rights for Schedules 3 and 4 of the Bill, notes that the creation of an offence of strict liability may raise human rights issues (specifically compliance with the presumption of innocence in Article 14(2) of the ICCPR), but justifies the approach as follows:

The strict liability offence is regulatory in nature and it is justifiable to expect individuals who participate in a regulated activity to be deemed to have accepted certain conditions and to show why they are not at fault for infringements.  Moreover, the reverse burden of proof relates to facts which are within the defendant’s own knowledge and to which they have ready access and, finally, the penalty falls at the lower end of the scale.[20]

Based on this assessment, the Parliamentary Joint Committee on Human Rights considered that the strict liability offence created by proposed subsection 77LA(5) is ‘unlikely to raise any issues of incompatibility with the presumption of innocence in article 14(2) of the ICCPR’.[21]

Access to premises

Item 14 of Schedule 3 also inserts proposed section 77LB to provide for access by officers of the ATO and Customs to certain premises for the purposes of provisions relating to gaseous fuels. These officers may at all reasonable times enter and remain on any land or premises; and may inspect, examine and make copies or take extracts from any documents. They may also inspect, examine, count, measure, weigh, gauge, test or analyse any goods or other property and take samples. An officer must have an authority signed by the Commissioner of Taxation to be produced if requested by the occupier of the land or premises (proposed subsection 77LB(3)).

The Parliamentary Joint Committee on Human Rights noted that the Statement of Compatibility with Human Rights for Schedules 3 and 4 of the Bill does not address whether proposed section 77LB is compatible with article 17 of the ICCPR, which provides that no one shall be subjected to arbitrary or unlawful interference with their privacy. The Committee proposed to seek the Treasurer’s advice on whether the monitoring powers are compatible with the right to privacy in article 17, before forming a view on whether the Bill is compatible with human rights.[22]   

Comparison of key features of new law and current law

The Explanatory Memorandum gives a succinct and useful table comparing the new law proposed by Schedule 3 and the current law. For ease of reference this table is included in Attachment A to this Bills Digest.[23]

Commencement and Application

Item 3 in the table in clause 2 of the Bill states that Schedule 3 commences on the later of 1 December 2012, and the day this Act receives the Royal Assent.

Item 19 of Schedule 3 states that the amendments to the Excise Act made by Part 1 of Schedule 3 apply in relation to gaseous fuel sold or supplied after that item commences. This will be on the later of 1 December 2012, and the day this Act receives the Royal Assent.

Schedule 4—Fuel blending exemptions

Background

The Explanatory Memorandum states that these amendments are technical in nature and ensure that the 2011 alternative fuels legislation works as intended.  They have not been previously announced.[24] 

The measures in Schedule 4 of the Bill clarify when the Commissioner may, by legislative instrument, specify circumstances when the creation of certain fuel blends is not intended to be considered as manufacture for the purpose of the excise legislation.

Key provisions

Currently, the definition of relevant fuel for the purpose of excise legislation is in subsection 77H(5) of the Excise Act 1901. The blending exemption for certain blends of relevant fuels is in subsections 77H(2A) and 77H(2B).

Item 5 of Schedule 4 repeals the definition of relevant fuel in subsection 77H(5) and item 1 of Schedule 4 repeals the blending exemptions in subsections 77H(2A) and 77H(2B). The Explanatory Memorandum states that these exemptions will instead be able to be specified by the Commissioner by legislative instrument.[25]

The Explanatory Memorandum states that the amendments proposed by items 2 to 4 of Schedule 4 are intended to clarify that the Commissioner’s power to provide exemptions by legislative instrument applies generally and is not confined to blending small amounts or to incidental blending.[26]

Commencement and Application

Item 4 in the table of clause 2 of the Bill states that the repeal of the blending exemptions in subsections 77H(2A) and (2B) of the Excise Act by item 1 of Schedule 4 will commence on a day to be fixed by Proclamation. However, if the repeal of these provisions does not commence within the period of six months beginning on the day this Act receives the Royal Assent, they commence on the day after the end of that period. Items 3 to 6 of Schedule 4 commence at the same time as item 1. Item 2 of Schedule 4, which inserts a note clarifying the general nature of the Commissioner’s power to provide exemptions through legislative instrument, commences on Royal Assent.

Schedule 5—Deductible gift recipients

Background

Organisations with deductible gift recipient status (DGRs) can receive income tax deductible donations. DGRs can be endorsed under the ITAA 1997 under a number of general categories or can be specifically listed in Division 30 of that Act.

The income tax law allows deductions for taxpayers who make gifts of $2 or more to DGRs.

Financial impact

The Explanatory Memorandum to the Bill states that the financial impact is nil. It is more likely that the Treasury is unable to estimate the revenue impact of claims that may be made by taxpayers for gifts to the Diamond Jubilee Trust Australia during the period 31 October 2012 to 1 July 2015 when it will have DGR status.

Key provisions

Subsection 30-80(2) of the ITAA 1997 lists specific international affairs organisations that have DGR status. Item 1 of Schedule 5 inserts ‘The Diamond Jubilee Trust Australia’ into the table in subsection 30‑80(2) of the ITAA 1997. The effect of the amendment is that taxpayers may claim an income tax deduction for gifts to that body that are made in the specified period.

Commencement and application

Item 7 in the table in clause 2 of the Bill provides that Schedule 5 commences on the day this Act receives the Royal Assent.

The special conditions specified in item 1 of Schedule 5 provide that the gift to the Diamond Jubilee Trust Australia must be made after 31 October 2012 and before 1 July 2015.

Schedule 6—Wine equalisation tax

Producer rebates

Background

Wine producers are entitled to a rebate for certain dealings in wine under Division 19 of the A New Tax System (Wine Equalisation Tax) Act 1999 (WET Act).[27]

Under the producer rebate scheme wine producers are currently entitled to a rebate of 29 per cent of the wholesale value of eligible domestic sales. The maximum amount of producer rebates to which a producer is entitled for a financial year under Division 19 is $500 000.[28]

For winemaker A to be eligible for the producer rebate:

A, must manufacture the wine from grapes, other fruit, vegetables or honey produced or purchased by A, or provide the grapes, other fruit, vegetables or honey to a contract winemaker B to be made into wine on behalf of the winemaker A.

Under current law, it is possible for different wine producers to claim multiple rebates on the same quantity of wine sold. This arises, for example when wines are blended to make a commercially distinct wine. In this case, both the blender of the constituent wines and the producers of the constituent wines may claim rebates on the same quantity of wine.

This measure was announced in the 2012–13 Budget.[29]

The amendments proposed in Schedule 6 of the Bill are intended to ensure that wine producers will not be able to claim multiple rebates on the same quantity of wine.

Financial impact

The Explanatory Memorandum states that the measure is estimated to result in a gain to revenue over the forward estimates period of $35 million, assuming a start date of 1 December 2012 as set out in the table below.[30]

2012–13

2013–14

2014–15

2015–16

$5m

$10m

$10m

$10m

Key provisions

Calculation of amount of producer rebates

Subsection 19-15(1) of the WET Act provides that a wine producer or a group of wine producers may claim a rebate at a rate of 29 per cent of the price (excluding wine tax and GST) for wholesale sales.

The maximum amount of producer rebates to which a producer is entitled for a financial year is $500 000 as provided for in subsection 19-15(2).

Further, if the producer is an associated producer of one or more other producers for a financial year, the maximum amount of producer rebates to which those producers are entitled as a group for the financial year is $500 000 as provided for in subsection 19-15(3).

Adjustment for earlier producer rebates in claiming producer rebate for constituent wine used in production

Item 1 of Schedule 6 inserts proposed section 19-17 into the WET Act to provide for the treatment of ‘earlier producer rebates’ in relation to ‘other wine’ used by a producer as a constituent in manufacturing their own wine.

Proposed subsection 19-17(1) provides that if any of the wine was produced using ‘other wine’, the entitlement to producer rebates is reduced by the sum of the amounts of any earlier producer rebate or rebates relating to such ‘other wine’.

Proposed subsection 19-17(3) states that the producer or supplier of the ‘other wine’ may notify, in the approved form, that:

(a)    the producer of ‘other wine’ is entitled to a producer rebate of a specified amount for the ‘other wine’; or

(b)   that the producer of that ‘other wine’ is not entitled to a rebate for such ‘other wine’.

Proposed subsection 19-17(2) sets out how the amount of the ‘earlier producer rebate’ is determined. If a producer is notified under proposed subsection 19‑17(3) of the amount of the constituent producer’s rebate for ‘other wine’ used in manufacturing his own wine, the earlier producer rebate is the amount set out in that notice that relates to the amount of wine used. If a producer is not given such a notice under proposed subsection 19‑17(3), the earlier producer rebate is the amount that would have been the producer’s rebate for the ‘other wine’, if the producer had been entitled to the full producer had been entitled to the full producer rebate on that other wine.[31] If a producer has been notified, under proposed subsection 19-17(3) that the producer of the ‘other wine’ is not entitled to a rebate there is no earlier producer rebate.

An example of the operation of proposed subsection 19-17(2) is given at the bottom of that subsection. This is set out below for ease of reference.

Example:

Winemaker A makes a wholesale sale of 100 litres of wine that it has manufactured to Winemaker B for $200. Winemaker B uses that wine to manufacture 100 litres of wine and then sells 30 litres to a distributor for $100.

Winemaker A has a rebate of $58 (assuming that it is not reduced because of an earlier producer rebate, and that Winemaker A has not already had the maximum rebate).

Winemaker B’s rebate for the $100 sale of 30 litres to the distributor would be $29. However, Winemaker A’s earlier producer rebate reduces Winemaker B’s rebate for the 30 litres by $17.40 (30/100 x $58). Winemaker B’s rebate is therefore $11.60. (It does not matter whether Winemaker A notifies Winemaker B of the earlier producer rebate).

If Winemaker A had not been entitled to any producer rebate, and Winemaker B had been notified accordingly, Winemaker B’s rebate for the $100 sale would have been $29.

Requirements for notices

Proposed section 19-28 of the WET Act, inserted by item 2 of Schedule 6, provides that it is an offence if a notice given, or purported to be given, under proposed subsection 19-17(3) is false or misleading. The maximum penalty for this offence is 20 penalty units.[32] This offence is one of strict liability. The issues associated with strict liability offences are discussed above in relation to proposed subsection 77LA(5) of the Excise Act, inserted by item 14 of Schedule 3 to the Bill. As with that provision, the Committee considered that the strict liability offence created by proposed section 19-28 of the WET Act is ‘unlikely to raise any issues of incompatibility with the presumption of innocence in article 14(2) of the ICCPR’.[33]    

Commencement and Application

Item 7 in the table in clause 2 of the Bill provides that Schedule 6 commences on the day this Act receives the Royal Assent.

Item 4 of Schedule 6 provides that the amendments made by Part 1 of that Schedule apply in relation to assessable dealings, on or after the day that is the later of 1 December 2012 or the day on which this Act receives the Royal Assent.

Attachment A

Comparison of key features of new law and current law

New law

Current law

Definition of ‘dutiable fuel use’

Dutiable fuel use means use of gaseous fuel in a vehicle or vessel but does not include LPG or LNG use in a vehicle or vessel that is exempted by regulation or CNG use in a vehicle or vessel exempted elsewhere in the Excise Act.

There is no definition of ‘dutiable fuel use’ but there is a definition of ‘excisable LPG fuel use’. 

Definition of ‘fuel tax relief’

Fuel tax relief specifies the circumstances where fuel tax relief is available for gaseous fuels either through a remission, refund or exemption.

There is no definition of ‘fuel tax relief’.

 

Forklift trucks not a motor vehicle

Forklift trucks primarily for use off public roads are not motor vehicles for the purpose of the Excise Act.

Forklift trucks primarily for use off public roads may be motor vehicles for the purpose of the alternative fuels legislation. 

Excise on LPG and LNG used in engines in licensed premises

LPG and LNG used in an internal combustion engine on licensed premises in the process of manufacturing petroleum condensate, stabilised crude petroleum oil, LPG, LNG, or other liquid hydrocarbons are not exempt from excise duty.

This is consistent with the current treatment of liquid fuels.

LPG and LNG used in an internal combustion engine on licensed premises in the process of manufacturing petroleum condensate, stabilised crude petroleum oil, LPG, LNG, or other liquid hydrocarbons are exempt from excise duty.

Provision of notices

Licensed entities and holders of permissions to deliver LPG into home consumption are required to provide a notice to accompany the supply of LPG for non-transport use.

Licensed entities that supply LPG are required to provide a notice to accompany the supply of LPG for non-transport use.

 Keeping and producing records

Unlicensed suppliers of LPG, LNG and CNG and businesses that acquire bulk gaseous fuels that are not for transport use are required to keep records that explain the supply or acquisition of the fuels.  The records must be produced to the ATO or Customs where requested.  A penalty applies if the records are not kept, retained or produced as requested.  

The excise and customs law does not require unlicensed suppliers of LPG, LNG and CNG and businesses that acquire bulk gaseous fuels to keep or produce records of transactions.

Officers’ access to premises

Officers of the ATO and Customs have access, for the purposes of the Excise Act, to unlicensed premises occupied by persons who are required to keep records under section 77LA. 

Officers of the ATO and Customs do not have access to unlicensed premises for the purposes of the Excise Act. 

Recovery of duty

Amounts equivalent to the excise duty or customs duty that would have been payable if fuel tax relief had not applied to the fuel can be recovered by the CEO where a person cannot satisfy the CEO that gaseous fuel subject to fuel tax relief has not been applied to a dutiable fuel use (either by use or on-supply). 

No power of recovery applies to gaseous fuels that are outside of the control of the CEO for duty that should have been paid on gaseous fuels subject to remission or exemption that are used for transport purposes.

Supply of dutiable gaseous fuel

The supply of LPG, CNG or LNG for transport use, where fuel tax relief applies to the fuel at the time of use, is an offence for which penalties apply.

Penalties only apply to the supply of LPG for a transport use where a remission of duty applied to the fuel at the time of use. 

Use of gaseous fuel subject to fuel tax relief for transport use

Use of a gaseous fuel subject to fuel tax relief for a transport use is an offence subject to penalties. 

No equivalent.

Remitting amounts payable for transport use of gaseous fuel subject to fuel tax relief

The Commissioner has the power to remit all or part of an amount payable when demanding an amount applicable under section 77M for using gaseous fuel subject to fuel tax relief for transport purposes. 

No equivalent.

Blending of gaseous fuels

The circumstances when the Commissioner can specify through legislative instrument when the creation of certain fuel blends is not to be treated as excise manufacture is clarified so that specific exemption rules set out in legislation are no longer required. 

The Commissioner can specify circumstances by legislative instrument where the blending of fuels is not to be treated as excise manufacture.  However, the circumstances where the Commissioner can exercise this power are uncertain. 

 

Members, Senators and Parliamentary staff can obtain further information from the Parliamentary Library on (02) 6277 2469.



[1].       There is a separate Statement of Compatibility with Human Rights for each Schedule of the Bill. See pages 9-10, 13, 26-27, 30-31, and 39-40 of the Explanatory Memorandum to the Bill.

[2].       Parliamentary Joint Committee on Human Rights, Fifth report of 2012, 15 October 2012, viewed 26 October 2012, http://www.aph.gov.au/Parliamentary_Business/Committees/Senate_Committees?url=humanrights_ctte/reports/index.htm

[3].       D Bradbury (Assistant Treasurer and Minister Assisting for Deregulation), Reforms to conservation tillage offset, media release, 29 June 2012, viewed 12 October 2012, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22media%2Fpressrel%2F1751728%22

[4].       Explanatory Memorandum, Tax Laws Amendment (2012 Measures No. 5) Bill 2012, p. 3, viewed 23 October 2012, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22legislation%2Fems%2Fr4891_ems_e045d8dc-121c-400f-b77f-2ee4885c5170%22

[5].       Australian Government, ‘Part 1: Revenue measures’, Budget measures: budget paper no. 2: 2012–13, Commonwealth of Australia, Canberra, 2012, p. 37, viewed 12 October 2012, http://www.budget.gov.au/2012-13/content/bp2/html/bp2_revenue-09.htm

[6].       Explanatory Memorandum, p. 4.

[7].       Parliamentary Joint Committee on Human Rights, op. cit., p. 32.

[8].       The text of the International Covenant on Civil and Political Rights can be viewed at: http://www.austlii.edu.au/au/other/dfat/treaties/1980/23.html

[9].       Parliamentary Joint Committee on Human Rights, op. cit., p. 33.

[10].      The four Acts which received the Royal Assent on 29 June 2011 are the Taxation of Alternative Fuels Legislation Amendment Act 2011, the Excise Tariff Amendment (Taxation of Alternative Fuels) Act 2011, the Customs Tariff Amendment (Taxation of Alternative Fuels) Act 2011 and the Energy Grants (Cleaner Fuels) Scheme Amendment Act 2011.

[11].      Explanatory Memorandum to the four Bills, namely, the Taxation of Alternative Fuels Legislation Amendment Bill 2011, the Excise Tariff Amendment (Taxation of Alternative Fuels) Bill 2011, the Customs Tariff Amendment (Taxation of Alternative Fuels) Bill 2011 and the Energy Grants (Cleaner Fuels) Scheme Amendment Bill 2011, viewed 17 October 2012, http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22legislation%2Fems%2Fr4554_ems_826d0355-5f47-414b-82c9-968aaf615c2c%22

[12].      Explanatory Memorandum, Tax Laws Amendment (2012 Measures No. 5) Bill 2012, p. 4.

[13].      Australian Taxation Office, ‘Fuel schemes essentials’, including Fuel tax credits – changes from 1 July 2012: gaseous fuels, ATO website, 26 July 2012, viewed 17 October 2012, http://www.ato.gov.au/businesses/content.aspx?menuid=0&doc=/content/00318033.htm&page=5&H5

[14].      Explanatory Memorandum, paragraphs 3.6 to 3.10, p. 16.

[15].      Explanatory Memorandum, p. 4.

[16].      Excise Act 1901, viewed 17 October 2012, http://www.comlaw.gov.au/Details/C2012C00578/Html/Text#_Toc332034158

[17].      Section 4AA of the Crimes Act 1914 provides that, unless the contrary intention appears, a ‘penalty unit’ in a Commonwealth law is equal to $110. Accordingly, the maximum penalty for this offence would be $3300. Section 4B of the Crimes Act provides that a body corporate is subject to a maximum penalty that is five times the amount of the penalty that may be imposed on a natural person, which in this case would be$16 500. The Crimes Act is available at: http://www.comlaw.gov.au/Details/C2012C00720

[18].      See section 6.1 of the Criminal Code Act 1995 at: http://www.comlaw.gov.au/Details/C2012C00547

[19].      Attorney-General, A Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers, September 2011, p. 24, viewed 26 October 2012, http://www.ag.gov.au/Documents/FINAL+-+A+Guide+to++Framing+Commonwealth+OffencesPDF+version.pdf

[20].      Explanatory Memorandum, op. cit., p. 27.

[21].      Parliamentary Joint Committee on Human Rights, op. cit., p. 32. The Committee’s comments also applied to proposed section 19-28 of the WET Act, discussed under Schedule 6, below.

[22].      Ibid., p. 33.

[23].      Explanatory Memorandum, Comparison of key features of new law and current law, pp. 18 to 20.

[24].      Explanatory Memorandum, p. 4.

[25].      Explanatory Memorandum, paragraph 3.34, p. 25.

[26].      Ibid.

[27].      A New Tax System (Wine Equalisation Tax) Act 1999 (Cth)(WET Act), viewed 16 October 2012, http://www.comlaw.gov.au/Details/C2012C00636

[28].      Australian Taxation Office (ATO), ‘Guide to wine equalisation tax’, including Wine producer rebate, ATO website, 2 July 2012, viewed 16 October 2012, http://www.ato.gov.au/businesses/content.aspx?menuid=0&doc=/content/00234529.htm&page=23&H23

[29].      Australian Government, Budget measures: budget paper no. 2: 2012–13, Commonwealth of Australia, Canberra 2012, p. 46, viewed 12 October 2012, http://www.budget.gov.au/2012-13/content/bp2/html/bp2_revenue-09.htm

[30].      Explanatory Memorandum, p. 6.

[31].      Ibid., p.36.

[32].      That is, $2200. See footnote 17 for further information.

[33].      Parliamentary Joint Committee on Human Rights, op. cit., p. 32. The Committee’s comments also applied to proposed section 19-28 of the WET Act, discussed under Schedule 6, below.

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