Summary of Alterations - Excise Tariff Proposal (No. 1) 2014 and Customs Tariff Proposal (No. 1) 2014

Summary of Alterations - Excise Tariff Proposal (No. 1) 2014 and Customs Tariff Proposal (No. 1) 2014

Chamber
House of Representatives
Parl No.
44
Date
30 Oct 2014
Type
Excise
Summary
SUMMARY OF ALTERATIONS EXCISE TARIFF PROPOSAL (No. 1) 2014 CUSTOMS TARIFF PROPOSAL (No. 1) 2014 Reasons for cha Read more
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SUMMARY OF ALTERATIONS

EXCISE TARIFF PROPOSAL (No. 1) 2014

CUSTOMS TARIFF PROPOSAL (No. 1) 2014

Reasons for changes: To re‑introduce indexation of excise and excise‑equivalent customs duty on fuel.

Date of effect: 10 November 2014

Alterations to the Excise Tariff Act 1921

Alterations to the Customs Tariff Act 1995

Excise is a duty imposed on fuel, alcohol and tobacco produced in Australia. These types of goods, known as excise‑equivalent goods, are subject to customs duty when they are imported. Customs duty includes a component at the same rate as the excise duty that applies to locally‑produced goods.

The rates of duty on alcohol and tobacco are increased based on indexation. Indexation of the rate of duty on fuel was removed in 2001.

In the 2014‑15 Budget, the Government announced the reintroduction of bi‑annual indexation of the rate of excise and excise‑equivalent customs duty on fuel. Indexation was scheduled to commence from 1 August 2014 to assist in funding road infrastructure. Following delays in passage of legislation, the rate of duty on fuel will now be indexed to the consumer price index (CPI) from 10 November 2014 (at a rate of $0.386 per litre). Indexation of duty on fuel based on the CPI will apply on each 1 February and 1 August in subsequent years. This measure does not apply to aviation fuel, production of stabilised crude petroleum oil and condensate, or petroleum‑based oils and greases.

Fuel (other than gaseous fuels)

From 10 November 2014 until 31 January 2015 the rate of excise and excise‑equivalent customs duty on fuel (other than gaseous fuels) will be $0.386 per litre (Schedule 1, Part 1 of the Excise Tariff Proposal (No. 1) 2014 (ETP) and Schedule 1, Part 1 of the Customs Tariff Proposal (No. 1) 2014 (CTP)).

From 1 February 2015, CPI indexation of duty on fuel will apply each year on 1 February and 1 August (Schedule 1, Part 2 of each of the ETP and CTP).

Gaseous fuels

The excise and excise‑equivalent customs duty rate from 1 July 2014 until 10 November 2014 for liquefied natural gas (LNG) and compressed natural gas (CNG) is $0.209 per kilogram and for liquefied petroleum gas (LPG) is $0.10 per litre. From 10 November 2014 until 31 January 2015, these rates will proportionally increase based on the liquid fuel duty rate of $0.386 per litre. For LNG and CNG the rate of duty will be $0.212 per kilogram (calculated as $0.386/$0.38143 x $0.209 per kilogram), and for LPG the rate of duty will be $0.101 per litre (calculated as $0.386/$0.38143 x $0.10 per litre) (Schedule 1, Part 1, items 10 to 12, subitems 10.19A, 10.19B and 10.19C of the ETP and Schedule 1, Part 1, item 1, new paragraphs 19AAB(1)(b), (c) and (d) and section 19AAC of the CTP).

From 1 February 2015, CPI indexation of duty on gaseous fuel will apply each year on 1 February and 1 August.

Under the Excise Tariff Amendment (Taxation of Alternative Fuels) Act 2011 and the Customs Tariff Amendment (Taxation of Alternative Fuels) Act 2011 on 1 July 2015, the rate of duty for LNG and CNG was scheduled to increase to $0.2613 per kilogram, and the rate of duty for LPG was scheduled to increase to $0.125 per litre. From 1 July 2015 until 31 July 2015 the duty rates under the tariff proposals will be set to account for these scheduled increases. For LNG and CNG, the rate will be based on $0.2644 per kilogram (calculated as $0.386/$0.38143 x $0.2613 per kilogram) and will also be subject to indexation that applies on 1 February 2015. For LPG, the rate will be based on $0.126 per litre (calculated as $0.386/$0.38143 x $0.125 per litre) and will also be subject to indexation that applies on 1 February 2015 (Schedule 1, Part 3 of each of the ETP and CTP).

The tabling of Excise Tariff Proposal (No. 1) 2014 and Customs Tariff Proposal (No. 1) 2014 in the House of Representatives is necessary to give effect to the changes.

Rounding of fuel duty rates to three decimal places of a dollar

Currently, the rates of excise and excise‑equivalent customs duty for most fuels are expressed to five decimal places of a dollar (equivalent to three decimal places of a cent). For instance, the duty rate for gasoline and diesel is $0.38143 per litre until 10 November 2014.

New section 6AAA in conjunction with subsection 6A(2) of the Excise Tariff Act 1921 and new section 19AAA in conjunction with subsection 19(2) of the Customs Tariff Act 1995, round the duty rates for all fuel that is subject to indexation to three decimal places of a dollar (equivalent to one decimal place of a cent) for indexation that applies from 1 February 2015.

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