Manufacture of fuel blends
Fuel blending is the blending of fuel with other fuels or any other substances. It can include the blending of different quantities of like-fuel, for example diesel with diesel.
Most fuel blending that produces an excisable good is considered manufacture of those goods for excise purposes. They are covered by item 10(g) of The Schedule to the Excise Tariff Act 1921.
The following examples are considered excise manufacture, where excise duty will apply to the blend:
- Blending fuel with like-fuel, such as blending diesel with diesel (imported or local) when one or both the blend components are underbond.
- Blending a transport gaseous fuel, such as liquid petroleum gas (LPG), with a like non-transport gaseous fuel for transport use.
Businesses that manufacture fuel blends in Australia may be entitled to fuel tax credits for excisable fuels they use in their fuel blends.
Exempt fuel blends
Some fuel blends are exempt from excise duty. These include fuel blends not considered to be excise manufacture and blends containing fuel components that are no longer considered to be fuel.
Fuel excise obligations
If you manufacture an excisable fuel blend, you must:
- hold an excise manufacturer licence – it's an offence to manufacture or store underbond excisable goods without the relevant licence
- report the quantity of product being delivered into the Australian domestic market on an excise return
- lodge your excise return and pay excise duty when applicable – you pay excise duty at the same time you lodge your excise return
- have permission to move any underbond excisable goods to another licensed premises or for export without first paying the applicable excise duty.
If you're still unsure of the tax treatment of your fuel blend, you can:
- seek advice from a registered tax agent
- contact us
- apply for a private binding ruling.
Note: Excise duty rates are indexed twice a year. Check the current rate when calculating the duty payable.
Understand which fuel blends are subject to excise.