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Fuel blends exempt from excise duty

Check when blending fuel is not considered manufacture or the blend is no longer fuel and excise duty is not payable.

Last updated 14 May 2023

List of general exemptions

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

  • section 77H of the Excise Act 1901
  • a determination (legislative instrument)
  • an excluded blend not considered to be manufacture for excise purposes.

Excise duty is not payable for:

  • 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 excise duty rates
  • fuels excisable under tariff item 10 of the Schedule to the Excise Tariff Act 1921, 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 help in its maintenance, and either
      • 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 they are packaged into containers of at least 10 litres capacity
      • they are 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).

For more details on blending exemptions, see EXC 2014/1 – Excise (Blending exemptions) Determination 2014 (No.1).

Exemptions for gaseous fuel

Excise duty is not payable on some gaseous fuel blends. This blending is not considered to be excise manufacture if either:

  • 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.
Start of example

Example: gaseous fuel mixed-duty rates

John is a service station operator. On 3 February 2023, John receives 10,000 litres of LPG that was duty paid. (No remission applies because it is intended for transport use).

The supplier adds this fuel to John's tank containing 5,000 litres of LPG. This was duty paid before 31 January 2023 at a different rate. (This also has no remission applied because it is intended for transport use).

The blending of these 2 quantities of LPG, although subject to different duty rates, does not constitute excise manufacture. The blend is not subject to further duty and John does not need to pay excise duty.

End of example

For more information, see Excise on fuel and petroleum products.

QC63560