Clean energy - changes to fuel tax credits and excise duty
Clean energy - changes to fuel tax credits and excise duty
This overview provides information about how the clean energy measures affect fuel tax credits and excise duty. It includes changes taking effect from 1 July 2013.
Liquid fuels (that is, taxable liquid fuels) are petrol, diesel and other combustible fossil fuels, such as kerosene, mineral turpentine, white spirit, toluene, heating oil and some solvents. They can also include blends involving one or more of these goods with or without other substances. Liquid fuels do not include fuel ethanol and biodiesel which have no effective fuel tax and are not fossil fuels.
Gaseous fuels are liquefied natural gas (LNG), liquefied petroleum gas (LPG) and compressed natural gas (CNG) and can be either:
- Transport gaseous fuels which are duty paid and include
- LPG or LNG intended for use in an internal combustion engine of a motor vehicle or vessel, either directly or by filling another tank connected to such an engine
- CNG that is imported or compressed for use as a fuel in a motor vehicle - excluding CNG that is compressed at a residential premises using equipment capable of compression at a rate not more than 10 kilograms of natural gas per hour and not for further sale
- all gaseous fuels delivered for mixed use (that is, both transport and non-transport use) or where the end use is unknown
- Non-transport gaseous fuels which will not be duty paid from 1 July 2013 and include
- LPG or LNG delivered only for use other than in an internal combustion engine of a motor vehicle or vessel (for example, residential heating or burner applications) or for use in forklifts
- CNG imported or compressed only for use in forklifts or not for use as a fuel in a motor vehicle. It also includes CNG compressed at a residential premises (including for use in a motor vehicle) using equipment capable of compression at a rate not more than 10 kilograms of natural gas per hour and not for further sale.
Carbon charge is an amount equal to the price of carbon emissions from the use of liquid fuels or gaseous fuels. This charge varies for the different fuels depending on their carbon emissions. Carbon charge amounts will increase annually until 30 June 2015. The rates may then be adjusted every six months from 1 July 2015.
From 1 July 2012
From 1 July 2012, businesses became liable for a carbon charge on certain fuels that are combusted. This carbon charge is generally applied through:
- a reduction in fuel tax credit entitlements
- an increase in the amount of excise duty payable on domestic aviation fuels (aviation kerosene and aviation gasoline)
- a reduction in the automatic remission of excise on LNG and LPG intended for non-transport use.
There was no change to excise or customs duty rates for liquid fuels (other than aviation fuels) or the exemption from duty for non-transport CNG.
From 1 July 2013
There will be a number of changes to excise duty and fuel tax credits due to clean energy changes taking effect from 1 July 2013.
Excise duty changes include:
- reinstatement of the full automatic remission of duty for non-transport LPG and LNG
- an increase in duty rates for domestic aviation fuels.
Fuel tax credit changes include:
- some rate changes due to increased carbon charge amounts
- rate changes for non-transport gaseous fuels used in certain activities.
In addition, rates for some liquid fuels and domestic aviation fuels are changing for entities that are declared by the Clean Energy Regulator to be a designated opt-in person under the opt-in scheme.
Full automatic remission of duty for non-transport LPG and LNG
From 1 July 2013, the carbon liability for LPG and LNG intended only for non-transport use will be imposed under the carbon pricing mechanism rather than through the excise system. Therefore, a full automatic remission of excise duty will apply for non-transport LNG and LPG delivered for home consumption (that is, into the Australian domestic market) from this date.
Non-transport CNG is covered under the carbon pricing mechanism (through the supply of the natural gas) in changes that came into effect from 1 July 2012.
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Gaseous fuel delivered for mixed use (transport and non-transport use), or where the end use is unknown, must be treated as transport gaseous fuel.
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If you deliver non-transport LNG or LPG for home consumption on or after 1 July 2013 you will:
- no longer need to report and pay excise for these fuels - you are still required to keep appropriate records
- be required to settle your carbon liability through the carbon pricing mechanism.
If you have an extended settlement period (separate periodic settlement permission) for these fuels, you are still required to report and pay excise for non-transport LPG and LNG you deliver for home consumption up to 30 June 2013 in accordance with your permission.
From 1 July 2013, the excise duty on domestic aviation fuel will increase due to an increase in carbon charge amounts included in the excise duty. Excise duty rates for these fuels include a hypothecated levy of 3.556 cents per litre to fund the Civil Aviation Safety Authority (CASA) and the carbon charge amount.
Table 1: Excise rates for domestic aviation fuels in cents per litre
Fuel type
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From 1 July 2012
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From 1 July 2013
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From 1 July 2014
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Aviation kerosene
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9.536
(3.556 + 5.98)
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9.835
(3.556 + 6.279)
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10.16
(3.556 + 6.604)
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Aviation gasoline
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8.616
(3.556 + 5.06)
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8.869
(3.556 + 5.313)
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9.144
(3.556 + 5.588)
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From 1 July 2015, the carbon charge may change every six months.
Example 1: Aviation fuel and the carbon charge
AeroMan, a licensed manufacturer of aviation fuel, supplies 50,000 litres of aviation gasoline to Air Cargo Inc on 21 July 2013. Air Cargo only provides domestic cargo services.
As the fuel has been supplied into the domestic market after 1 July 2013, AeroMan will need to pay the increased rate of excise duty, which is 8.869 cents per litre, for aviation gasoline they supply to Air Cargo.
Air Cargo has not been declared a designated opt-in person under the opt-in scheme. Air Cargo Inc cannot claim fuel tax credits for aviation fuel acquired for use in aircraft.
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For current and previous years' fuel tax credit rates, refer to Fuel tax credit rates and eligible fuels. The fuel tax credit rates that will apply from 1 July 2013 will be available closer to this date.
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Rate changes due to increased carbon charge amounts
Carbon charge amounts for liquid and gaseous fuels will increase from 1 July 2013, reducing fuel tax credit rates for fuels and activities other than those listed below at 'Exemptions to the carbon charge'.
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From 1 July 2013, the fuel tax credit rates for:
- non-transport gaseous fuels used in specified agriculture, fishing or forestry activities will increase because the rate is equal to the carbon charge amount.
- transport gaseous fuels will increase due to the annual increase in excise duty for these fuels (until 30 June 2015) under a different measure. Some fuel tax credit rates for these fuels are also reduced by the carbon charge amounts.
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Exemptions to the carbon charge
The carbon charge does not affect the fuel tax credit rates for:
- liquid and transport gaseous fuels used in
- heavy vehicles with a gross vehicle mass (GVM) greater than 4.5 tonne travelling on public roads - diesel vehicles acquired before 1 July 2006 can equal or exceed 4.5 tonne
- specified agriculture, fishing or forestry activities
- activities that do not involve combustion of the fuel - for example, fuel used to clean machinery or as a mould release agent
- liquid fuels used by businesses covered by the opt-in scheme
- renewable fuels such as biodiesel or fuel ethanol.
Carbon charge amounts will increase annually, reducing fuel tax credit rates until 30 June 2015. The rates may then be adjusted every six months from 1 July 2015.
Table 2 below shows carbon charge amounts for the various fuels. Fuel tax credit rates for liquid fuels and transport gaseous fuels are reduced by these amounts when used in activities not listed in the exemptions above.
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For the current and previous years' fuel tax credit rates, refer to Fuel tax credit rates and eligible fuels. The fuel tax credit rates that apply from 1 July 2013 will be available closer to this date.
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Table 2: Carbon charge for the various fuels (these are not fuel tax credit rates)
Fuel type
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From 1 July 2012
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From 1 July 2013
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From 1 July 2014
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Petrol (cents per litre)
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5.52
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5.796
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6.096
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Diesel and other liquid fuels (cents per litre)
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6.21
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6.521
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6.858
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LPG (cents per litre)
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3.68
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3.864
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4.064
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LNG (cents per kilogram)
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6.67
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7.004
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7.366
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CNG (cents per kilogram)
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6.67
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7.004
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7.366
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Biodiesel, renewable diesel, fuel ethanol (cents per litre)
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0.0
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0.0
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0.0
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Example 2: Fuel tax credits and the carbon charge
A mining company acquires diesel for use in their off-road plant and machinery. For diesel they acquire from 1 July 2012, the rate they use to determine their fuel tax credit entitlement is reduced by a carbon charge. For diesel they acquire after 1 July 2013, the rate is further reduced due to the increased carbon charge amount, see calculation below:
Fuel type
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Fuel tax credit rate in cents per litre
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Diesel used in off-road mining activities where the fuel is combusted.
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From 1 July 2012
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From 1 July 2013
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From 1 July 2014
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31.933
(38.143 - 6.21)
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31.622
(38.143 - 6.521)
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31.285
(38.143 - 6.858)
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From 1 July 2013, carbon charge amounts for gaseous fuels will increase. This will increase the fuel tax credits available for non-transport gaseous fuels used in specified activities in:
- agriculture
- fishing
- forestry.
Fuel tax credits will not be available for non-transport gaseous fuels used in any other activities.
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From 1 July 2013, fuel tax credits will no longer be available for non-combustible uses of non-transport LPG or LNG, such as LPG used as a propellant in the manufacture of aerosols.
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Table 3: Fuel tax credit rates from 1 July 2013 for non-transport gaseous fuels
Activity
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LPG (cents per litre)
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LNG or CNG (cents per kilogram)
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Specified activities in:
- agriculture
- fishing
- forestry.
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3.864
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7.004
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Non-combustible uses.
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0.00
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0.00
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Other off-road activities where the fuel is combusted, such as mining, construction and landscaping.
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0.00
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0.00
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Opt-in scheme
Certain large users of liquid fuels can apply to the Clean Energy Regulator to opt-in to the carbon pricing mechanism. If the application is accepted, they will be declared a designated opt-in person. From 1 July 2013, a designated opt-in person will discharge their carbon liability on their liquid fuel use through the carbon pricing mechanism instead of through the excise and fuel tax credit systems.
If you are a designated opt-in person who is registered for fuel tax credits:
- the fuel tax credit rates for liquid fuels you acquire from 1 July 2013 will no longer be reduced by the carbon charge - therefore you can claim the full rate of 38.143 cents per litre for liquid fuels you use in eligible off-road activities, such as construction, mining or landscaping
- you will be able to claim fuel tax credits at a rate equal to the carbon charge for domestic aviation fuels you acquire from 1 July 2013.
For more information about:
If you do not speak English well and need help from the 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 relayservice.com.au and ask for the ATO number you need.
Last Modified: Friday, 19 April 2013
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