Cleaner fuels grants scheme guide
Cleaner fuels grants scheme guide
This guide provides you with information about the cleaner fuels grants scheme and how to:
- register for a cleaner fuels grant
- make a claim
- offset your cleaner fuel grant against your excise duty payments if you are eligible.
Throughout this guide you will find important notes (look for the  symbol) that will help you with key information you should note.
You will also find 'more information' boxes (look for the  symbol) that will show any further steps you may need to take or supplementary information you may need to refer to.
This section provides an overview of:
- what the cleaner fuels grants scheme is
- cleaner fuel grant rates.
The cleaner fuels grants scheme encourages the manufacture or importation of fuels that have a reduced impact on the environment. If you manufacture and import cleaner fuels that meet the relevant fuel standard under the Fuel Quality Standards Act 2000, you may be entitled to a cleaner fuel grant.
Eligible cleaner fuels include renewable fuels such as biodiesel and renewable diesel.
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From 1 July 2011, the cleaner fuels grants scheme has been extended indefinitely. It will continue to provide a grant for 100% of the excise or customs duty on eligible biodiesel and renewable diesel only.
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A production grant of 38.143 cents per litre, equal to the excise duty rate, is currently available to domestic producers of fuel ethanol. This grant is administered by the Department of Resources, Energy and Tourism. For more information about the production grant, visit www.ret.gov.au
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Biodiesel
From 18 September 2003, you can receive a cleaner fuel grant of 38.143 cents per litre for producing or importing biodiesel if it meets the biodiesel fuel quality standard.
The grant offsets the excise or customs duty payable on your biodiesel, reducing the net effective duty to zero for biodiesel that meets the standard.
Renewable diesel
From 1 July 2006, you can receive a cleaner fuel grant of 38.143 cents per litre for producing or importing renewable diesel if it meets the diesel fuel quality standard.
The grant offsets the excise or customs duty payable on your renewable diesel, reducing the net effective duty to zero for renewable diesel that meets the standard.
This section provides information about:
- who is eligible for the cleaner fuels grants scheme
- licensing
- eligible cleaner fuels
- fuel standards.
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If, after reading this section, you need more information about your eligibility you can write to us or apply for a private ruling. For more information about applying for a private ruling:
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You are eligible to claim a cleaner fuels grant if:
- you are registered for the cleaner fuels grants scheme
- you are an importer or a licensed person
- your fuel is an eligible cleaner fuel
- your cleaner fuel meets the applicable fuel standard under the Fuel Quality Standards Act 2000 or complies with a variation given by the Minister for Sustainability, Environment, Water, Population and Communities, and
- you enter the fuel for home consumption, or
- you bought the fuel from an importer or a person licensed for the fuel and the fuel had previously been entered for home consumption, and
- the fuel is either consumed in your business or sold to an unlicensed person.
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The cleaner fuels grant is generally paid to the last licensed person in the distribution chain before the cleaner fuel enters the marketplace.
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Licensed person
A licensed person can be:
- a licensed manufacturer
- the holder of an excise storage licence
- the holder of an appropriate permission issued under the Excise Act 1901 or the Customs Act 1901.
The above authorisations must cover a cleaner fuel for the person to be 'licensed for the fuel' under the cleaner fuel grant scheme.
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You need an excise licence even if you are making a cleaner fuel, such as biodiesel, for your own personal use. If you are manufacturing without a licence, penalties may be imposed on your unlicensed activities.
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If you are a licensed person, you will only be licensed for the fuel where either:
- the fuel is at a premise stated in your licence
- you hold a permission and the permission lists the premise.
Eligible cleaner fuels
Eligible cleaner fuels include renewable fuels such as biodiesel and renewable diesel.
Renewable fuels
Biodiesel is a fuel that is manufactured by chemically altering vegetable oils or animal fats (including recycled oils from these sources) to form mono-alkyl esters and complies with the fuel standard for biodiesel.
Renewable diesel is a liquid fuel that is manufactured by chemically altering vegetable oils or animal fats (including recycled oils from these sources) through a process of hydrogenation and that complies with the fuel standard for diesel. Renewable diesel is manufactured at the same time as diesel using the same process, so it only exists as a proportion of a quantity of diesel and is not able to be isolated.
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Your biodiesel must meet the biodiesel fuel standard and your renewable diesel must meet the diesel fuel standard to be eligible for the grant.
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Blended biodiesel
You need to determine your entitlement to a grant on the blended fuel you have produced. If you blend a cleaner fuel with another fuel before the goods are entered for home consumption and the blend does not meet the applicable fuel standard, the original entitlement to a cleaner fuels grant for the fuel ceases.
If the blend meets the applicable fuel standard, you are entitled to a grant on the blended fuel based on the quantity of biodiesel included in the blend.
You are undertaking excise manufacturing if you are blending either:
- fuels before payment of duty
- biodiesel after payment of duty.
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If you undertake excise manufacturing, you require an excise manufacturer licence.
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If you are engaged in the further manufacture or blending of a cleaner fuel that duty has already been paid on, you should verify the production and sale history of the fuel at the time you purchase it. This may affect your entitlement to the grant and the amount of duty payable.
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For an excise licence application, or if you are unsure of the licence status of a business, phone us on 1300 137 292.
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If you combine two like-fuels, the original entitlement to the grant ceases. You need to determine your entitlement to a grant on the blended fuel you have produced.
If you are entitled to a grant after combining biodiesel with other biodiesel, you are entitled to a grant on the combined product.
You are undertaking excise manufacturing if you are combining either:
- fuels before payment of duty
- blending biodiesel after payment of duty.
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If you undertake excise manufacturing, you require an excise manufacturer licence.
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If you are engaged in the further manufacture or blending of a cleaner fuel that duty has already been paid on, you should verify the production and sale history of the fuel at the time you purchase it. This may affect your entitlement to the grant and the amount of duty payable.
The Fuel Quality Standards Act 2000 regulates the quality of fuel supplied in Australia. This is to reduce the level of pollutants and emissions from the use of fuel that may cause environmental and health problems. There are currently fuel standards for petrol, diesel and biodiesel.
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To claim the grant, your fuel must meet the relevant standard, or comply with a variation given by the Minister for Sustainability, Environment, Water, Population and Communities. If your fuel is not eligible for the grant, you will still be required to pay any duty on the fuel.
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For more information about fuel quality standards, visit the Department of Sustainability, Environment, Water, Population and Communities website at www.environment.gov.au
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To be eligible for a cleaner fuels grant, you must be able to show that the biodiesel you produce meets the biodiesel fuel quality standard (FQS).
You can do this by testing every batch you produce against all 20 criteria in the biodiesel FQS.
However, we recognise this requirement is onerous and expensive and have put in place administrative arrangements to minimise your testing requirements while still providing us with a reasonable assurance that you can produce eligible fuel on an ongoing basis.
These arrangements are:
First claims
When you start up a new plant, or recommission an existing plant, you must fully test your production against the biodiesel FQS until you are certain you are consistently producing biodiesel that meets the biodiesel FQS.
The number of tests of consecutive batches necessary to establish this is five.
Subsequent testing
Once you demonstrate that you can consistently produce biodiesel that meets the FQS standard by producing five consecutive batches that pass full testing requirements, we will accept that subsequent biodiesel produced in continuous, or batch production, also meets the standard for a period of up to three months before full testing needs to be conducted once again.
You must carry out sufficient tests on every batch produced to assure yourself that the batch would have complied with all criteria in the biodiesel FQS if it had been fully tested. These critical tests aim to ensure that the transesterification reaction has gone to completion, the biodiesel product has been adequately purified and certain key operability factors are tested. They are for:
- free and total glycerol
- ester content
- flashpoint or methanol content
- acid value
- density
- viscosity.
In addition, you must fully test one batch against the biodiesel FQS every three months.
Record keeping
Your records must provide us with reasonable assurance that all your biodiesel production would have met all the criteria in the biodiesel FQS if tested.
Example 1
Pensky Fuels has an excise licence and manufactures 10,000 litres of biodiesel and sells it to Lloyd Braun Distribution Enterprises. The biodiesel has been tested and meets the biodiesel fuel standard.
Pensky Fuels enters the biodiesel for home consumption by lodging an excise return. It applies to offset the excise due on its excise return with the cleaner fuels grant form, because they are lodged at the same time.
Lloyd Braun Distribution Enterprises is not eligible to claim the cleaner fuels grant because it's not licensed.
Pensky Fuels is entitled to claim the cleaner fuels grant as it's the last licensed person in the distribution chain before the biodiesel enters the marketplace.
Example 2
Burke Biodiesel has a contract to supply a bus company with 20,000 litres of biodiesel. However, it runs short and is unable to fill the entire order in time.
Therefore, it purchases 5,000 litres of biodiesel underbond from Biodiesel Without Borders, another licensed biodiesel producer.
Burke Biodiesel blends the 5,000 litres of biodiesel at its licensed premises with 15,000 litres it has produced. It tests the blend and determines that it meets the biodiesel standard and then delivers it to the bus company.
Burke Biodiesel enters 20,000 litres of biodiesel for home consumption by lodging an excise return and paying the duty. As it's the last licensed person in the distribution chain before the fuel enters the marketplace, it's eligible for the cleaner fuels grant. It can apply to offset the excise due on its excise return with the cleaner fuels grant if it lodges its return and grant forms at the same time.
The bus company is not eligible to claim the grant because it's not licensed.
Example 3
Free's Biodiesel is a licensed biodiesel manufacturer. It has a contract to supply biodiesel to Barry's Diesel who brings in tankers of diesel to Free's Biodiesel for blending with biodiesel.
The biodiesel is added straight into the tanker to create a B5 blend. Barry's Diesel has a periodic settlement permission and must report the B5 blend.
Barry's Diesel is entitled to claim the cleaner fuels grant on the biodiesel in the blend as both the diesel and biodiesel components meet their respective fuel standards and Barry's Diesel is the last licensed person in the chain who holds an appropriate permission.
Example 4
AJ Biodiesel is a licensed biodiesel producer. It produces 2 million litres of biodiesel per year. AJ Biodiesel does not want to be involved in the distribution of biodiesel and has signed a contract to supply biodiesel to Paulies Oils and Fuels, a distributor of biodiesel and biodiesel blends.
Paulies Oils and Fuels holds a periodic settlement permission but does not have an excise manufacturer licence. AJ Biodiesel will sell the biodiesel to Paulies Oils and Fuels who will move it underbond on its continuing movement permission to the licensed site of Tony's Blends Incorporated.
Tony's Blends Incorporated is a contractor who on behalf of other clients:
- stores
- blends
- delivers petroleum products.
Tony's Blends Incorporated also stores diesel from Silvio's Diesel for distribution.
Paulies Oils and Fuels have a contract with Tony's Blends Incorporated for blending of B5 with the biodiesel from AJ Biodiesel and the diesel from Silvio's Diesel. Both the diesel and biodiesel are certified as meeting the applicable fuel quality standards. Paulies Oils and Fuels are eligible to claim the cleaner fuel grant as it's the last licensed person. It must enter the B5 on an excise return and is entitled to claim the cleaner fuels grant for the biodiesel component of the B5 blend. It can apply to offset the excise due on the excise return with the cleaner fuels grant if it lodges the return and the grant forms at the same time.
This section provides information about:
- how to register
- cancelling your registration.
To register for the cleaner fuels grants scheme, you can:
- phone us on 13 28 66
- complete an application for registration.
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For more information, refer to the Cleaner fuels grants scheme application for registration (NAT 9915).
You will need to provide your Australian business number (ABN). If you don't have an ABN and you are not entitled to an ABN, you can quote your tax file number (TFN). If you are not sure if you need to obtain an ABN, phone us on 13 28 66 before you complete the registration.
You must register before you can claim the grant, but by registering you are not automatically entitled to a grant.
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If your circumstances change and you are no longer eligible to claim, you should cancel your registration by phoning us on 13 28 66.
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If you are registered for the cleaner fuels grants scheme but have not made a claim during a 13 month period, we may cancel your registration. We will notify you in writing if we do this. You can apply for a new registration in the future.
This section provides information about:
- how to claim a cleaner fuels grant
- when to claim
- your claim assessment
- amendments
- returned products
- exported goods.
When you are registered for the cleaner fuels grant you will receive a supply of forms, including a claim form. Keep these as master copies and photocopy them as needed.
The forms will be pre-populated with:
- your registered name and address
- your cleaner fuels client account number
- the origin and product that you are registered for.
Send us your completed claim form when you lodge your excise return.
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If you need another copy of the Cleaner fuels grants scheme claim form (NAT 9840), phone us on 1300 137 294.
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You may claim a grant for cleaner fuel purchased up to three years after the start of your claim period.
Generally, the date of your entitlement is the date you enter the fuel for home consumption.
When you make your claim, you should include all your entitlements to a cleaner fuels grant for that period.
When your claim has been processed, we will send you a claim assessment for each claim you lodge. The claim assessment advises you of the amount of cleaner fuels grant you are entitled to, even if the assessment is nil. It also shows any adjustments made.
If we amend your claim amount, we will contact you to make arrangements for repayment.
If we have agreed to transfer credits between your grant client account number and your excise client account number, your claim assessment will advise you of the amount we have transferred.
If you incur a debt as a result of an overpayment of the grant and the debt has not been paid by the required time, we may apply interest to the overpayment amount. If, as a result of an appeal or review, it is found that we did not pay you the amount you were entitled to, you will be paid interest on the amount we underpaid. Interest will be calculated from the date the original assessment notice was issued.
If you need to amend your claim, you should advise us in writing as soon as possible.
You should either:
- send us a signed written request
- use the Cleaner fuels grants scheme request to amend a claim (NAT 9841) form.
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To obtain a copy of the Cleaner fuels grants scheme request to amend a claim (NAT 9841), phone us on 1300 137 294.
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Your request to amend your claim should include:
- your client account number - shown on your claim form and claim assessment
- the claim reference number - shown on your claim assessment
- details of the amendment required
- the reason for the amendment.
Returned products
If you have received a grant on a quantity of cleaner fuel and that fuel is returned to you, you may be entitled to a refund of duty.
You will also be required to pay back any cleaner fuel grant you have received for the quantity of fuel returned. You can do this for any cleaner fuels by separately notifying us of a refund of duty in respect of the fuel. An amended assessment will then be issued for the claim period in which the grant was originally made. The resulting debt on the amended assessment can then be paid to us.
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As the amended assessment results in a debt, you may incur a general interest charge.
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If you have received a grant on a quantity of cleaner fuel and that fuel is subsequently exported, you are not entitled to a grant.
If you become aware that fuel on which you have received a grant is exported, adjust your claims using the same method as outlined in the section Returned products.
This section provides information about:
- how we pay your grant
- paying tax on your grant.
We pay your grant into the bank account you nominated on your registration form. We may use your cleaner fuels grant to offset your excise liability if the amount of the grant equals the excise liability.
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To use the credit transfer option, you will need to complete a Cleaner fuels grants scheme authority to transfer credit (NAT 9842) form. To obtain a copy, phone us on 1300 137 294.
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Paying by mail
If you are not eligible to transfer credit, or choose not to take up this option, you need to lodge your cleaner fuels grant claim by mail to:
You must include your cleaner fuels grant in your income tax return as it is assessable income.
It is not pay as you go (PAYG) instalment income and you do not have to include it on your activity statement. However, you may choose to voluntarily include it on your activity statement at label T1.
Record keeping
The importance of record keeping
You must keep appropriate records to support your claim for a cleaner fuels grant. You must keep these records for five years after you make the claim.
Your records must be accurate and complete. It is particularly important that your records show that your cleaner fuel meets the relevant fuel standard or complies with a variation given by the Minister for Sustainability, Environment, Water, Population and Communities.
We can examine your claims at any time to ensure they meet the requirements of the cleaner fuels grants scheme. If you cannot support your claims with adequate records, you may have to repay all or part of the grant you receive.
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If you are unsure of the information you may need to support your claims, you should phone us on 13 28 66.
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Records required
The records you are required to keep differ depending on:
- the type of cleaner fuel
- whether you manufacture, import or purchase the cleaner fuel
- whether the cleaner fuel is a blend.
To support your claim for a cleaner fuels grant, you need to keep records that demonstrate your ability to consistently produce biodiesel that we can be reasonably assured meets the Australian fuel quality standard for biodiesel. As a minimum these records should be:
- volume of biodiesel claimed, corrected to 15ºC using the American Society for Testing and Materials (ASTM) Petroleum Measurement Table 54B
- test results appropriate to the volume claimed - either full results or results of critical tests as in the section Subsequent testing.
In addition, your records need to contain details of:
- the type of feedstock processed, correlated with each batch produced
- details of any quality assurance processes and manufacturing practices associated with your production of biodiesel
- evidence the test results can be correlated with the particular production batch.
You must have evidence that covers the entire quantity of biodiesel that you have claimed a cleaner fuel grant for. You may need to have several test certificates to cover the amount you have claimed a grant for.
You may also want to consider retaining a sample of each production batch for six months. Additional testing can then be done if there is any doubt about the ability of any given batch to meet the biodiesel FQS. Ensure your retained samples do not deteriorate during storage as this would invalidate any subsequent testing.
If you intend to blend B100 that you have purchased from a supplier, you must keep a copy of the invoice that includes a statement of compliance with the Australian biodiesel fuel standard.
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Although accreditation/membership of a quality assurance system such as BQ9000 will be looked on favourably, we will not accept this alone as evidence of conformity with the fuel quality standard.
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The following table is a guide to the types of records we will accept:
Table 1: Records required for biodiesel
Activity
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Records required
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Example
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You are the eligible claimant and you manufactured or imported the biodiesel.
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Details of feedstock used and manufacturing practices.
Certification from a laboratory substantiating compliance with the Australian biodiesel fuel standard.
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Black Biodiesel manufactures B100 and makes retail sales to a wide variety of businesses.
As the last licensed person in the supply chain, Black Biodiesel is eligible to claim the cleaner fuels grant if we can be reasonably assured that the biodiesel meets the Australian fuel standard.
Black Biodiesel must keep records as outlined above to provide this reasonable assurance.
If audited, they would provide this certificate to support their entitlement to a cleaner fuels grant.
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You are the eligible claimant and you purchased biodiesel from a supplier who manufactured or imported the fuel.
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If locally manufactured, an invoice that includes a statement of compliance with the Australian biodiesel fuel standard as required under section 19 of the Fuel Quality Standards Act 2000.
If imported, a copy of the certification from a laboratory substantiating the supplied fuel is compliant with the Australian biodiesel fuel standard.
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Black Biodiesel manufactured B100 and sold it wholesale to Smith's Biodiesel Servo (another licensed person), who mixes it with diesel and on-sells it to transport companies.
Black Biodiesel is not entitled to claim the cleaner fuels grant but is required to include a statement of compliance with the fuel standard on the invoice to Smith's.
Smith's is entitled to claim a cleaner fuels grant as the last licensed person in the supply chain.
The invoice with the 'statement' is sufficient proof that the fuel claimed met the standard.
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If you lodge a claim for a cleaner fuel grant for a biodiesel/diesel blend, you need to know how the biodiesel blend was originally made.
If you are engaged in the further manufacture or blending of biodiesel, you should verify the production and sale history of the biodiesel at the time you purchase it, as this may affect your entitlement to the grant.
To support your claim for a cleaner fuels grant you need to keep the records detailed in the table below.
Table 2: Records required for biodiesel/diesel blends
Activity
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Records required
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Example
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You are the eligible claimant and you imported a biodiesel/diesel blend that does not exceed 5% biodiesel (B5), or B20 if you have been granted an approved variation to the standard.
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A copy of the certification from a laboratory is required to substantiate the supplied fuel complies with the Australian diesel fuel standard.
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Brown's Fuels imports a biodiesel/diesel B5 blend and makes retail sales to a wide variety of businesses.
As the last licensed person in the supply chain, Brown's Fuels is eligible to claim the cleaner fuels grant if the B5 blend complies with the Australian fuel quality standard for diesel.
Brown's Fuels must hold a copy of the certification from a laboratory substantiating compliance with the Australian diesel fuel standard.
If audited, it would provide this certificate to support its entitlement to a cleaner fuels grant.
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You are the eligible claimant and you purchase a biodiesel/diesel blend that does not exceed 5% biodiesel (B5), or B20 if you have been granted an approved variation to the standard.
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Either:
- an invoice that includes a statement of compliance with the Australian diesel fuel standard
- a copy of the certification from a laboratory substantiating the supplied fuel is compliant with the Australian diesel fuel standard.
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Green's Distributors is a wholesale fuel distributor and purchases a B20 blend from Stellar Petroleum which has been granted approval to vary the diesel standard to B20. Green's distributes fuel to service stations and is the last licensed person in the supply chain.
The supplier of the B20 blend is required to include a statement of compliance with the fuel standard on the invoice to Green's Distributors.
Green's Distributors is eligible to claim a cleaner fuels grant as the last licensed person in the supply chain.
The invoice with the 'statement' is sufficient proof that the fuel for which it has claimed a grant has met the standard.
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You are the eligible claimant and you manufacture or import a biodiesel/diesel blend, or you purchase a biodiesel/diesel blend from a manufacturer or importer, that either:
- does not comply with the Australian diesel fuel standard
- is a blend containing more than 5% biodiesel (>B5) without an approved variation from the Minister for Sustainability, Environment, Water, Population and Communities.
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The biodiesel component of the blend requires separate certification that it meets the biodiesel fuel quality standard.
You will need to obtain a copy of the certification from your supplier.
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Z Corp purchases a B25 blend from a manufacturer and makes retail sales to a wide variety of businesses.
As the last licensed person in the supply chain, Z Corp is eligible to claim a cleaner fuels grant for the biodiesel component of the blend if the biodiesel component meets the biodiesel fuel quality standard.
Z Corp obtains a copy of the certificate of compliance of the biodiesel component of the fuel from the supplier as well as details as to the proportion of biodiesel in the blend purchased.
This would provide sufficient certification of compliance of the biodiesel component of the blend and enable Z Corp to correctly calculate its entitlement to a cleaner fuels grant.
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The cleaner fuels grant for biodiesel/diesel blends is only payable on the biodiesel component of the blend.
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To substantiate a claim, you will need to know the proportion of biodiesel in any blend, in addition to meeting the general requirements for record keeping and compliance with the relevant Australian fuel quality standard.
For more information about the biodiesel, petrol or automotive diesel fuel standards, visit the Department of Sustainability, Environment, Water, Population and Communities website at www.environment.gov.au
For more information about excise licensing requirements:
- visit our website at www.ato.gov.au/excise
- phone us on 13 28 66 between 8.00am and 6.00pm, Monday to Friday
- write to us at
If you do not speak English well and need help from the Australian Taxation Office (ATO), phone the Translating and Interpreting Service on 13 14 50.
If you are deaf, or have a hearing or speech impairment, phone the ATO through the National Relay Service (NRS) on the numbers listed below:
- TTY users, phone 13 36 77 and ask for the ATO number you need
- Speak and Listen (speech-to-speech relay) users, phone 1300 555 727 and ask for the ATO number you need
- internet relay users, connect to the NRS on www.relayservice.com.au and ask for the ATO number you need.
Last Modified: Friday, 17 February 2012
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