TAXATION OF ALTERNATIVE FUELS LEGISLATION AMENDMENT BILL 2011

i Taxation of Alternative Fuels Legislation Amendment Bill 2011 No. , 2011

Contents

1 Short

title

...........................................................................................

2 Commencement

.................................................................................

3 Schedule(s)

........................................................................................

Schedule 1--Amendments

Part 1--Excise Act 1901

Part 2--Fuel Tax Act 2006

Part 3--Product Grants and Benefits Administration Act 2000

Part 4--Taxation Administration Act 1953

Schedule 2--Transitional provisions for excise on gaseous fuels

Taxation of Alternative Fuels Legislation Amendment Bill 2011 No. , 2011 1

A Bill for an Act to change the law relating to

certain fuels, and for related purposes

The Parliament of Australia enacts:

1 Short title

This Act may be cited as the Taxation of Alternative Fuels

Legislation Amendment Act 2011.

2 Commencement

(1) Each provision of this Act specified in column 1 of the table

commences, or is taken to have commenced, in accordance with

column 2 of the table. Any other statement in column 2 has effect

according to its terms.

2 Taxation of Alternative Fuels Legislation Amendment Bill 2011 No. , 2011

Commencement information

Column 1

Column 2

Column 3

Provision(s)

Commencement

Date/Details

1. Sections 1 to 3

and anything in

this Act not

elsewhere covered

by this table

The day this Act receives the Royal Assent.

2. Schedules 1

and 2

1 December 2011.

However, the provision(s) do not commence

at all if any of the following do not

commence on or before 1 December 2011:

(a) Part 1 of Schedule 1 to the Excise Tariff

Amendment (Taxation of Alternative

Fuels) Act 2011;

(b) Part 1 of Schedule 1 to the Customs

Tariff Amendment (Taxation of

Alternative Fuels) Act 2011;

(Cleaner Fuels) Scheme Amendment Act

2011.

Note:

This table relates only to the provisions of this Act as originally

enacted. It will not be amended to deal with any later amendments of

this Act.

(2) Any information in column 3 of the table is not part of this Act.

Information may be inserted in this column, or information in it

may be edited, in any published version of this Act.

3 Schedule(s)

Each Act that is specified in a Schedule to this Act is amended or

repealed as set out in the applicable items in the Schedule

concerned, and any other item in a Schedule to this Act has effect

according to its terms.

Amendments Schedule 1

Excise Act 1901 Part 1

Taxation of Alternative Fuels Legislation Amendment Bill 2011 No. , 2011 3

Schedule 1--Amendments

Part 1--Excise Act 1901

1 Subsection 4(1)

Insert:

apply, in relation to an LPG remission, has a meaning affected by

subsection (5).

2 Subsection 4(1)

Insert:

excisable LPG use in relation to LPG:

(a) means the use of LPG 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; but

(b) does not include the use of LPG for a motor vehicle that:

(i) is designed merely to move goods with a forklift and is

for use primarily off public roads; or

(ii) is of a kind prescribed by the regulations for the

purposes of this subparagraph.

3 Subsection 4(1)

Insert:

LPG means:

(a) liquid propane; or

(b) a liquid mixture of propane and butane; or

consists mainly of propane; or

(d) a liquid mixture of propane, butane and other hydrocarbons

that consists mainly of propane and butane.

4 Subsection 4(1)

Insert:

LPG remission in relation to LPG means a remission, refund or

rebate of excise duty that applies to LPG under regulations made

Schedule 1 Amendments

Part 1 Excise Act 1901

4 Taxation of Alternative Fuels Legislation Amendment Bill 2011 No. , 2011

under section 78 because the LPG is not intended to be used for an

excisable LPG use.

5 At the end of section 4

Add:

(5) To avoid doubt, an LPG remission ceases to apply in relation to

LPG if the excise duty on the LPG is subsequently paid (despite

the remission having previously applied).

6 Subsection 58(2)

Omit ", condensate or liquefied petroleum gas", substitute "or

condensate".

7 Subsection 58(3)

Repeal the subsection, substitute:

(3) Subsection (2) does not apply to excisable goods that are stabilised

crude petroleum oil, or condensate, obtained from prescribed

petroleum, within the meaning of section 5B of the Excise Tariff

Act 1921, produced from a Resource Rent Tax area as defined in

that Act.

8 At the end of subsection 65(1)

Add:

; (d) the energy content of excisable goods.

9 Subsection 77H(5) (definition of eligible goods)

After "(d),", insert "(da), (db), (dc),".

10 After section 77H

Insert:

77HA Compressed natural gas that is exempt from excise duty

Compressed natural gas is exempt from excise duty if any of the

following apply:

(a) the gas was compressed for use other than as a fuel for a

motor vehicle;

Amendments Schedule 1

Excise Act 1901 Part 1

Taxation of Alternative Fuels Legislation Amendment Bill 2011 No. , 2011 5

(b) the gas was compressed other than in the course of carrying

on an enterprise (within the meaning of the A New Tax

System (Goods and Services Tax) Act 1999);

that:

(i) is designed merely to move goods with a forklift and is

for use primarily off public roads; or

(ii) is of a kind prescribed by the regulations for the

purposes of this subparagraph.

77HB Liquefied petroleum gas and liquefied natural gas that is

exempt from excise duty

Liquefied petroleum gas or liquefied natural gas is exempt from

excise duty if:

(a) the liquefied petroleum gas or liquefied natural gas is used by

a licensed manufacturer on premises specified in the

manufacturer licence; and

(b) the use is in the process of manufacturing:

(i) petroleum condensate or stabilised crude petroleum oil;

(ii) liquefied petroleum gas, liquefied natural gas or other

hydrocarbons; and

paragraph (b) in accordance with the licence.

11 At the end of Part VIIB

Add:

77L Notice requirements for sales or supplies of LPG to which an

LPG remission applies

(1) A person (the licensee) who holds a manufacturer licence or a

storage licence must give a notice to a person if:

(a) the licensee sells or supplies LPG to the person; and

(b) an LPG remission applies to the LPG at the time of the sale

or supply.

Note: The

meaning

apply is affected by subsection 4(5).

(2) A person (the supplier) must give a notice to a person if:

Schedule 1 Amendments

Part 1 Excise Act 1901

6 Taxation of Alternative Fuels Legislation Amendment Bill 2011 No. , 2011

(a) the supplier sells or supplies the LPG to the person; and

(b) an LPG remission applies to the LPG at the time of the sale

or supply; and

given a notice under this section (including under a previous

application of this subsection) in respect of that LPG.

Note:

The regulations may prescribe circumstances in which a notice is not

required to be given (see subsection (4)).

Contents of notice

(3) A notice under this section must:

(a)

set

out:

(i) that excise duty has not been paid on the LPG that is

being sold or supplied; and

(ii) the effect of sections 77M and 117BA; and

(b) be given in the manner and form prescribed by the

regulations.

Regulations

(4) The regulations may prescribe circumstances in which a notice is

not required to be given by a person under this section.

Offence

(5) A person commits an offence if:

(a) a person is required to give a notice under this section; and

(b) the person fails to give the notice in accordance with this

section.

Penalty: 1 penalty unit.

Note:

See section 4AA of the Crimes Act 1914 for the current value of a

penalty unit.

77M Penalty for using LPG for excisable LPG use

(1) This section applies if:

(a) LPG is sold or supplied to a person; and

(b) the person uses the LPG for an excisable LPG use; and

Amendments Schedule 1

Excise Act 1901 Part 1

Taxation of Alternative Fuels Legislation Amendment Bill 2011 No. , 2011 7

Note 1:

The meaning of apply is affected by subsection 4(5).

Note 2:

A person might commit an offence if the person sells LPG and the

LPG is used for an excisable LPG use (see section 117BA).

(2) The person must, on demand in writing made by a Collector, pay to

the Commonwealth an amount equal to 2 times the amount of the

duty that would have been payable on the LPG if:

(a) an LPG remission had not applied to the LPG; and

(b) the LPG had been entered for home consumption on the day

on which the Collector made the demand.

Note:

For provisions about collection and recovery of the amount, see

Part 4-15 in Schedule 1 to the Taxation Administration Act 1953.

(3) A demand under subsection (2) is not a legislative instrument.

12 After section 117B

Insert:

117BA Unlawfully selling LPG that is used for an excisable LPG use

A person commits an offence if:

(a) the person intentionally sells LPG; and

(b) the person knows that, or is reckless as to whether, the LPG

will be used for an excisable LPG use; and

(d) an LPG remission applies to the LPG at the time of the use.

Penalty: 2 years imprisonment or the greater of:

(a) 500 penalty units; and

(b) 5 times the amount of duty that would be payable if the

goods had been entered for home consumption on the penalty

day (assuming that an LPG remission had not applied to the

LPG).

Note 1:

The meaning of apply is affected by subsection 4(5).

Note 2:

See section 4AA of the Crimes Act 1914 for the current value of a

penalty unit.

13 Subparagraph 127A(a)(ii)

After "117B,", insert "117BA,".

14 Paragraph 162C(1)(e)

Amendments Schedule 1

Fuel Tax Act 2006 Part 2

Taxation of Alternative Fuels Legislation Amendment Bill 2011 No. , 2011 9

Part 2--Fuel Tax Act 2006

15 Section 2-1

Omit "It is intended that this Act be extended to apply to certain

compressed and liquefied gaseous fuels.".

16 At the end of subsection 40-5(2)

Add:

; and (d) fuel supplied into certain kinds of tanks.

17 Section 41-1

Omit:

The first situation is where you acquire, manufacture or import fuel

to use in carrying on your enterprise (whether the fuel is used as

fuel or otherwise). The second situation is where you acquire,

manufacture or import fuel to make a taxable supply to a private

user for domestic heating or to package the fuel for the purpose of

making a taxable supply of it for use other than in an internal

combustion engine.

substitute:

The first situation is where you acquire, manufacture or import fuel

to use in carrying on your enterprise (whether the fuel is used as

fuel or otherwise).

The second situation is where you acquire, manufacture or import

fuel to:

(a)

make a taxable supply to a private user for

domestic heating; or

(b)

package the fuel for the purpose of making a

taxable supply of it for use other than in an internal

combustion engine; or

(c)

make a taxable supply of LPG into certain kinds of

tanks.

Schedule 1 Amendments

Part 2 Fuel Tax Act 2006

10 Taxation of Alternative Fuels Legislation Amendment Bill 2011 No. , 2011

18 Section 41-10 (heading)

Repeal the heading, substitute:

41-10 Fuel tax credit for fuel supplied for domestic heating,

packaged for supply or transferred into tanks

19 Before subsection 41-10(1)

Insert:

Certain fuels supplied for domestic heating

20 Before subsection 41-10(2)

Insert:

Certain fuels packaged for supply

21 At the end of section 41-10

Add:

LPG supplied into certain kinds of tanks

(3) You are entitled to a fuel tax credit for taxable fuel that is

LPG

that you acquire or manufacture in, or import into, Australia to the

extent that:

(a) you do so for making a

taxable supply of the LPG; and

(b) the supply involves transferring the LPG to a tank; and

internal combustion engine of either a

motor vehicle or a

vessel, either directly or by filling another tank connected to

such an engine; and

(d) any of the following apply to the tank:

(i) the tank has a capacity of not more than 210 kilograms

of LPG and is for use in

carrying on an

enterprise;

(ii) the tank is at

residential premises and is not for use in

carrying on an enterprise;

(iii) the tank is for use in a system for supplying fuel to at

least 2 residential premises (whether or not the system

also supplies fuel to premises other than residential

premises).

Amendments Schedule 1

Fuel Tax Act 2006 Part 2

Taxation of Alternative Fuels Legislation Amendment Bill 2011 No. , 2011 11

(4) Paragraph (3)(c) does not apply to a

motor vehicle that:

(a) is designed merely to move goods with a forklift and is for

use primarily off public roads; or

(b) is of a kind prescribed by the regulations for the purposes of

this paragraph.

22 Application

Subsections 41-10(3) and (4) of the Fuel Tax Act 2006 apply to taxable

fuel acquired, manufactured or imported on or after 1 December 2011.

23 Subsection 41-15(1)

After "credit" (wherever occurring), insert "(under this Division or

Division 42)".

24 Previous interpretation preserved

The amendment of subsection 41-15(1) of the Fuel Tax Act 2006 made

by this Schedule does not affect by implication the interpretation of the

subsection before the amendment.

25 Section 43-1 (after the paragraph relating to the amount of

your credit for taxable fuel)

Insert:

For taxable fuel that is a blend of fuels, there are additional rules

for working out the amount of your credit.

26 Subsection 43-5(2)

Repeal the subsection, substitute:

Amount of effective fuel tax

(2)

The

amount of effective fuel tax that is payable on the fuel is the

amount (but not less than nil) worked out using the formula:

Fuel tax amount

Grant or subsidy amount

where:

fuel tax amount means the

amount of fuel tax that was or would

be payable on the fuel at the rate in force on the day worked out

using the table in subsection (2A).

Schedule 1 Amendments

Part 2 Fuel Tax Act 2006

12 Taxation of Alternative Fuels Legislation Amendment Bill 2011 No. , 2011

grant or subsidy amount means the

amount of any grant or

subsidy, except a grant specified in subsection (3), that was or

would be payable in respect of the fuel by the Commonwealth at

the rate in force on the day worked out using the table in

subsection (2A).

Note:

Section 43-7 affects how this subsection applies to blends.

Day for rate of fuel tax, grant or subsidy

(2A) Work out the day using the table:

Day for rate of fuel tax, grant or subsidy

If:

The day is:

1 You:

(a) acquired or imported the fuel after

30 November 2011 and before

1 July 2015; and

(b) are

registered for GST or

required

to be registered for GST

The day you acquired or

imported the fuel

2 You:

(a) manufactured the fuel; and

(b) entered the fuel for home

consumption (within the meaning

of the Excise Act 1901) after

30 November 2011 and before

1 July 2015; and

registered for GST or

required

to be registered for GST

The day you entered the

fuel for home

consumption (within the

meaning of the Excise

Act 1901)

3 You:

(a) acquired, manufactured or imported

the fuel after 30 June 2015; and

(b) are

registered for GST or

required

to be registered for GST

The first day of the

tax

period to which the credit

is attributable

4 You are neither

registered for GST

nor

required to be registered for GST

The day the

Commissioner receives

your return relating to the

fuel

Note:

Division 65 sets out which tax period a credit is attributable to.

27 Subsection 43-5(4)

Amendments Schedule 1

Fuel Tax Act 2006 Part 2

Taxation of Alternative Fuels Legislation Amendment Bill 2011 No. , 2011 13

Repeal the subsection.

28 After section 43-5

Insert:

43-7 Working out the effective fuel tax for fuel blends

Certain blends containing ethanol

(1)

The

effective fuel tax for taxable fuel that:

(a) is a blend of ethanol and one or more other kinds of fuel; and

(b) meets the requirements prescribed by the regulations;

is worked out under subsection 43-5(2) as if the fuel were entirely

petrol.

Certain blends containing biodiesel

(2)

The

effective fuel tax for taxable fuel that:

(a) is a blend of biodiesel and one or more other kinds of fuel;

and

(b) meets the requirements prescribed by the regulations;

is worked out under subsection 43-5(2) as if the fuel were entirely

diesel.

Other blends for which there is evidence of fuel proportions

(3)

The

effective fuel tax for taxable fuel:

(a) that is a blend of more than one kind of fuel; and

(b) to which neither subsection (1) nor (2) applies; and

Commissioner of the actual proportions of the kinds of fuel

in the blend;

is worked out under subsection 43-5(2) in accordance with those

proportions.

(4) The Commissioner may determine, by legislative instrument, the

kinds of documentary evidence that are able to satisfy the

Commissioner for the purposes of paragraph (3)(c).

(5)

If:

Schedule 1 Amendments

Part 2 Fuel Tax Act 2006

14 Taxation of Alternative Fuels Legislation Amendment Bill 2011 No. , 2011

(a) you acquire or manufacture in, or import into, Australia a

taxable fuel that is a blend of either of the following (whether

or not the blend includes other substances other than fuel):

(i) petrol and one other kind of fuel;

(ii) diesel and one other kind of fuel; and

(b) none of subsections (1), (2) or (3) apply to the fuel; and

conditions that specify or require that the blend contains a

minimum percentage by volume of petrol or diesel (as the

case requires);

then the effective fuel tax for the fuel is worked out under

subsection 43-5(2) as if:

(d) the fuel contains that minimum percentage of petrol or diesel

(as the case requires); and

(e) the remaining percentage by volume of the fuel consists of

the other kind of fuel contained in the blend.

Rules for working out fuel tax in other cases of blends

(6) For the purposes of working out under subsection 43-5(2) the

effective fuel tax payable on taxable fuels that are blends other

than blends to which any of subsections (1), (2), (3) or (5) of this

section apply, the Commissioner may determine, by legislative

instrument, rules for working out the proportions of one or more of

the constituents of the blends.

Note:

The rules may make different provision for different blends or

different classes of blends (see subsection 33(3A) of the Acts

Interpretation Act 1901).

Working out the fuel tax for certain fuels containing ethanol

(7)

Work

out

the

effective fuel tax under subsection 43-5(2) for

taxable fuel:

(a) that you acquired, manufactured or imported; and

(b) that is a blend containing ethanol; and

as if a grant under a funding agreement with the Commonwealth

connected with a program called the Ethanol Production Grants

Program was payable for all the ethanol.

Note:

As you may not know whether the ethanol contained in the blend is

imported or produced domestically, subsection (7) requires you to

Amendments Schedule 1

Fuel Tax Act 2006 Part 2

Taxation of Alternative Fuels Legislation Amendment Bill 2011 No. , 2011 15

work out the effective fuel tax assuming that the ethanol was produced

domestically and had attracted the payment of a grant.

29 Application

(1)

The amendments of section 43-5 of the Fuel Tax Act 2006 made by this

Schedule apply to fuel acquired, manufactured or imported on or after

1 December 2011.

(2)

Section 43-7 of the Fuel Tax Act 2006, as inserted by this Schedule,

applies to fuel acquired, manufactured or imported on or after

1 December 2011.

30 Subsection 60-5(1)

Omit "(1)".

31 Subsection 60-5(1) (note at the end of the definition of

total fuel tax)

Omit the second sentence.

32 Section 110-5 (definition of effective fuel tax)

Omit "section 43-5", substitute "sections 43-5 and 43-7".

33 Section 110-5

Insert:

LPG means:

(a) liquid propane; or

(b) a liquid mixture of propane and butane; or

consists mainly of propane; or

(d) a liquid mixture of propane, butane and other hydrocarbons

that consists mainly of propane and butane.

34 Section 110-5

Insert:

residential premises has the meaning given by section 195-1 of the

GST Act.

Schedule 2 Transitional provisions for excise on gaseous fuels

18 Taxation of Alternative Fuels Legislation Amendment Bill 2011 No. , 2011

Schedule 2--Transitional provisions for

excise on gaseous fuels

1 Definitions

In this Schedule:

CEO has the same meaning as in the Excise Act 1901.

Collector has the same meaning as in section 15 of the Excise Act 1901.

excisable goods has the same meaning as in the Excise Act 1901.

factory has the same meaning as in the Excise Act 1901.

licence has the same meaning as in the Excise Act 1901.

manufacture has the same meaning as in the Excise Act 1901.

manufacturer licence has the same meaning as in the Excise Act 1901.

2 Application

(1)

This Schedule applies in relation to a person and any of the following

excisable goods that the person manufactures, or proposes to

manufacture, while the person does not have a manufacturer licence for

the goods:

(a) liquefied petroleum gas;

(b) liquefied natural gas;

(c)

compressed

natural

gas.

Note:

Not all liquefied petroleum gas, liquefied natural gas or compressed natural gas is

excisable goods.

(2)

However, this Schedule does not apply in relation to the person and the

goods after the time described in an item of the table.

When this Schedule does not apply if manufacturer licence is not granted

If:

This Schedule does not apply after:

Before 1 February 2012:

(a) the person applies for a

manufacturer licence for the goods;

and

(b) the Collector refuses to grant the

licence

The Collector refuses to grant the

licence

Before 1 February 2012:

The earliest of the following times:

Transitional provisions for excise on gaseous fuels Schedule 2

Taxation of Alternative Fuels Legislation Amendment Bill 2011 No. , 2011 19

When this Schedule does not apply if manufacturer licence is not granted

If:

This Schedule does not apply after:

(a) the person applies for a

manufacturer licence for the goods;

and

(b) the Collector has not decided

whether to grant or refuse to grant

the licence

(a) the time the Collector refuses to

grant the licence;

(b) the end of 30 November 2012;

subitem (3) for the goods

The person does not apply for a

manufacturer licence for the goods

before 1 February 2012

31 January 2012

Note:

This Schedule does not apply after the Collector grants the person a manufacturer

licence for the goods (because this Schedule applies only while the person does not have

such a licence).

(3)

The Collector may by legislative instrument determine for goods a time

after 31 January 2012 and before the end of 30 November 2012. The

time must be after the determination is made. The Collector may

determine different times for different goods.

3 Operation of rules about licences

(1)

The person need not comply with the provisions of the Excise Act 1901,

and regulations made under that Act, relating to licences for the goods.

(2)

However, if the person manufactures the goods:

(a) the person must comply with that Act and those regulations

as if the person held a manufacturer licence to manufacture

the goods; and

(b) the premises on which the person manufactures the goods are

taken to be a factory for the purposes of that Act and those

regulations.

4 Permission to deliver goods for home consumption

(1)

If the person manufactures the goods, the person is taken to have been

given permission under section 61C of the Excise Act 1901 to deliver

the goods for home consumption from the place where they are subject

to the CEO's control.

Commonwealth of Australia Bills

TAXATION OF ALTERNATIVE FUELS LEGISLATION AMENDMENT BILL 2011