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  • Fuel blends exempt from excise duty

    Some fuel blending is not considered excise manufacture if the resulting blend is exempt under either:

    • section 77H of the Excise Act
    • a determination (legislative instrument).

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    List of general exemptions

    Excise duty is not payable in the following situations, as these blends are excluded as they aren't considered to be manufactured, for excise purposes:

    • a blend that can't be used in an internal combustion engine, when any fuel components of the blend have been duty paid at the applicable rate
    • a blend that can be used in an internal combustion engine where excise or customs duty has been paid on all components in the blend – the rate of duty paid must be the same, except if the rates are different due to
      • a component being biodiesel or fuel ethanol
      • the twice-yearly indexation of fuel duty rates
       
    • fuels excisable under tariff item 10 of the Schedule to the Excise Tariff Act, which are exempt under a determination if any of the following apply
      • when oil and gasoline are blended for use as two-stroke gasoline (petrol) and duty has been paid on both the oil and the gasoline
      • fuels that are placed in a tank containing remnants of other fuels excisable under tariff item 10 or another substance (incidental blend)
      • duty-paid diesel or biodiesel that is blended with certain stabilised crude oil
      • fuels on which duty has been paid that are blended with a dye
      • fuels on which duty has been paid and which are blended with prepared additives (other than methanol or fuel excisable under tariff item 10 or their imported equivalents) that enhance the performance of an internal combustion engine or assist in its maintenance and either of the following applies
        • they are packaged into containers of not more than 10 litres capacity
        • the total amount of prepared additives in the final blend does not exceed 0.5% volume/volume and are packaged into containers of at least 10 litres capacity
         
       
    • a blend that we have determined to be no longer a fuel under section 95–5 of the Fuel Tax Act 2006 (Fuel Tax Act).

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    Exemptions for gaseous fuel

    In addition to the above, excise duty is not payable on some blends involving gaseous fuel. This is because this blending is not considered to be excise manufacture if one of the following applies:

    • It's a blend of liquefied petroleum gas (LPG) or liquefied natural gas (LNG) and a remission of excise or customs duty has been applied to all components of the fuel blend because it's intended for non-transport use.
    • The blend is exempted by a determination.

    Example 1: Gaseous fuel mixed duty rates

    John is a service station operator. On 3 February 2020, John receives 10,000 litres of LPG that was duty paid (with no remission applied because it was intended for transport use). The supplier adds this fuel to John's tank containing 5,000 litres of LPG that was duty paid before 31 January 2020 at a different rate (also with no remission applied because it was intended for transport use).

    The blending of these two quantities of LPG, although subject to different duty rates, does not constitute excise manufacture and therefore the blend is not subject to further duty.

    End of example

    Excise obligations

    If excise duty has been paid on all the excisable components of the blend, and the resulting blend is not excisable, you will have no further excise liability or excise obligations.

    Excise obligations if you are eligible for fuel tax credits

    If an entity (including you or your supplier) has been entitled to a fuel tax credit on any of the components of the blend, then the blending is excise manufacture and you will still have excise obligations.

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    See also:

    • EXC 2014/1Excise (Blending exemptions) Determination 2014 (No.1)
    Last modified: 15 Sep 2020QC 63560