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  • Recycled fuel and fuel products

    Recycled fuel products are liquid hydrocarbon products derived through a recycling, manufacturing or other process from used or waste petroleum-based oils and their synthetic equivalents.

    These products include burner fuels recycled from waste oil, recovered diesel and petrol.

    The term ‘recycling’ does not include the reuse of used oil where nothing new, different or having a distinctive character or use has been manufactured or produced.

    Generally, recycled fuel products are classified to tariff subitem 10.28 and are subject to the same rate of excise duty as petrol and diesel. To manufacture these products you must have an appropriate excise licence from the ATO, lodge an excise return and pay excise duty.

    There is benefits payable under the Product Stewardship (Oil) Act 2000 for the recycling of waste oil. Product Stewardship for Oil (PSO) program benefit rates for recyclers vary depending on the extent to which the oil is processed and the end product of the recycling activity.

    Find out about:

    Contractors paid to collect waste oil

    Contractors who collect waste oil and deliver it to your premises are not required to hold an excise licence or pay excise duty on the waste oil.

    Filtered and de-watered used oil as burner fuel

    Where a process merely consists of filtering and de-watering used oil, such a process is not considered excise manufacture as the resulting end product is not relevantly different from the used oil in either its physical characteristics or in its utility. Nothing new or different having a distinctive character or use has been manufactured or produced.

    Although this product may be used as a burner fuel, this liquid is not subject to excise duty and you are not required to hold an excise licence. There is also no entitlement to a PSO program benefit or fuel tax credits.

    See also:

    • ER 2012/1 Excise: the meaning of the expression 'manufactured or produced' for the purposes of the Excise Acts
    • PGBR 2012/1 Product Stewardship (Oil) Benefit: the meaning of the expression 'goods produced from used oil' and the terms 'filtered', 'de-watered', and 'de-mineralised' for the purposes of the Product stewardship for oil benefit scheme
    • Product stewardship for oil program

    Recycled oil and diesel blends

    If you recycle oil and blend it with diesel the entire blend is excisable if the proportion of diesel to recycled oil is sufficient to enable it to be used in an internal combustion engine. The blend is classifiable to tariff subitem 10.30 and excise duty is payable. The amount of duty payable is reduced by any duty paid on the components of the blend.

    Where the proportion of diesel to recycled oil is insufficient to allow the blend to be used in an internal combustion engine, the blend is not excisable.

    • Excise duty is still payable on all components of the blend that are classified to tariff item 10. In this case, diesel is classified to subitem 10.10 and recycled oil to subitem 10.28.
    • The fuels included in the blend are deemed to have been used and therefore you may be eligible to claim the fuel tax credit. If you claim the credit and then sell the fuel blend, it's expected that the benefit of the credit would be reflected in the selling price.

    Generally, where all components of a blend (for example, recycled oil and diesel) are duty paid the blend is not considered excise manufacture because the correct duty has been paid on the blend.

    However, a blend that contains a substance that is a taxable fuel for which any entity has been entitled to a fuel tax credit will be excisable regardless of whether duty has been paid.

    See also:

    Last modified: 08 Feb 2017QC 47689