Bills Digest No. 61 1999-2000 Taxation Laws Amendment Bill (No. 9) 1999


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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.

CONTENTS

Passage History
Purpose
Background
Main Provisions
Endnotes
Contact Officer & Copyright Details

Passage History

Taxation Laws Amendment Bill (No. 9) 1999

Date Introduced: 2 September 1999

House: House of Representatives

Portfolio: Treasury

Commencement: Immediately after the commencement of the Customs and Excise Amendment (Diesel Fuel Rebate Scheme) Act 1999, i.e. from 1 July 2000.

Purpose

To ensure that the diesel fuel rebate rate applying to eligible forestry activities is aligned with the rate applying to other primary production activities.

Background

Prior to the agreement between the Government and the Democrats on the modified diesel fuel rebate scheme (DFRS), the rebate for eligible activities was the same across all primary production (agriculture, forestry and fishing).

The relevant part of the Government / Democrat agreement states:

The extension to the off-road concession for diesel and like fuels will be limited to providing full credits for marine use, bush nursing homes, aged persons homes and private residences but not for construction, power generation, manufacturing or forestry. (emphasis added).(1)

This meant that forestry would not get the 100 per cent rebate ('full credit') that marine etc use will receive. No mention was made of agriculture. No details were provided as to the rates of rebate that would apply to the activities that would not receive the 100 per rebate.

The changes to the DFRS were implemented through the Customs and Excise Amendment (Diesel Fuel Rebate Scheme) Act 1999. Subsection 5AAA of that Act states that:

A declaration ... may declare different rates for

(a)   use of diesel fuel in primary production other than forestry; and

(b)   use of diesel in forestry.

However, the rate declared for use of diesel fuel in forestry must be 35/43 of the rate declared for use of diesel fuel in primary production other than forestry.

The effect of this legislation was that the parity between the primary production sectors was broken, with forestry receiving only 81.4% (i.e. 35/43) of the rebate applicable to the other sectors. This effect seemed to be confirmed in the second reading speech

The full rebate will be extended to...agriculture, fishing and mining...currently they do not receive a full rebate. Forestry will continue to have access to the rebate in the proportion it currently receives.(2)

The move created concern within the forestry peak body, the National Forests Industry Association, who described it as creating a 'significant disincentive to investment'(3) in the forest sector.

However, the Government has now said that it always intended the forestry and timber processing industries would receive the same rebate amount as other primary production industries(4) and has introduced the Taxation Laws Amendment Bill (No. 9) to correct the situation.

Main Provisions

Item 1 of Schedule 1 repeals subs 164(5AAA) and (5AAB) of the Customs Act 1901. These subsections were inserted by the subsection 5AAA Customs and Excise Amendment (Diesel Fuel Rebate Scheme) Act 1999 referred to in the background of this digest.

Item 2 of Schedule 1 repeals subs 78A(5AAA) and (5AAB) of the Excise Act 1901. These subsections were also inserted by the subsection 5AAA Customs and Excise Amendment (Diesel Fuel Rebate Scheme) Act 1999 referred to in the background of this digest.

The effect of these changes will be to repeal the differential rate between forestry and other primary production sectors imposed by subsection 5AAA of the Customs and Excise Amendment (Diesel Fuel Rebate Scheme) Act 1999.

Endnotes

  1. Prime Minister's Website, 'Changes to the Goods and Services Tax' http://www.pm.gov.au/media/pressrel/1999/changes3105.htm

  2. The Hon. John Anderson, House of Representatives, Debates, 22 June 1999

  3. NAFI Website, 'GST and Diesel Fuel Excise Rebate' NAFI News, July/August 1999 http://www.nafi.com.au/newsletter/1999-08/

  4. The Hon Wilson Tuckey, House of Representatives, Debates, 2 September 1999

Contact Officer and Copyright Details

Angus Martyn and Richard Webb
16 September 1999
Bills Digest Service
Information and Research Services

This paper has been prepared for general distribution to Senators and Members of the Australian Parliament. While great care is taken to ensure that the paper is accurate and balanced, the paper is written using information publicly available at the time of production. The views expressed are those of the author and should not be attributed to the Information and Research Services (IRS). Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion. Readers are reminded that the paper is not an official parliamentary or Australian government document.

IRS staff are available to discuss the paper's contents with Senators and Members
and their staff but not with members of the public.

ISSN 1328-8091
© Commonwealth of Australia 1999

Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, without the prior written consent of the Parliamentary Library, other than by Members of the Australian Parliament in the course of their official duties.

Published by the Department of the Parliamentary Library, 1999.

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