Excise on gaseous fuels
Gaseous fuels are liquefied petroleum gas (LPG), liquefied natural gas (LNG) or compressed natural gas (CNG).
Businesses that manufacture or store gaseous fuels in Australia need to understand their excise obligations. Obligations vary depending on the type of fuel and whether the intended use of the fuel product is for transport or non-transport purposes.
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Transport gaseous fuels
Transport gaseous fuels 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 for use as a fuel in a motor vehicle
- excluding CNG compressed at a residential premises where both the following apply
- you use equipment capable of compression at a rate not more than 10 kilograms of natural gas per hour, and
- it's not for sale
- all gaseous fuels for either
- mixed use (that is, both transport and non-transport use)
- where the end use is unknown.
We also treat gaseous fuels as transport gaseous fuel for excise purposes if you either:
- deliver it for mixed use (for both transport and non-transport use) into one tank
- don't know its intended end use when you deliver it into the Australian domestic market.
Excise obligations for transport gaseous fuels
If the gaseous fuel you manufacture and store is intended to be supplied or used for transport purposes, it's subject to excise. You will need:
- an excise manufacturer licence
- to lodge an excise return and pay excise duty
- to keep complete and accurate records of all transport gaseous fuels you manufacture.
If you move underbond transport gaseous fuels between licensed premises, you will need our permission.
Generally, you need to lodge an excise return and pay excise duty before you deliver the gaseous fuel products into the Australian domestic market. However, if you have a periodic settlement permission (PSP) from us, you can defer lodgment and payment until after you deliver the gaseous fuel products into the Australian domestic market. Delivery into the Australian domestic market also occurs when you use gaseous fuels at the licensed premises.
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See also:
- EXC 2016/8 – Excise (Volume of LPG - Temperature and Pressure Correction) Determination 2016 (No. 2)
Non-transport LPG and LNG
If you manufacture LPG or LNG that's not intended for transport use, it will be free of excise duty, however you will still have excise obligations to fulfil. A full automatic remission removes the liability for excise duty or customs duty from non-transport LPG and LNG.
Non-transport LPG and LNG – includes LPG and 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
- in forklifts.
Excise obligations for non-transport LPG and LNG
Even though a full automatic remission applies, you will still have excise obligations. You will need:
- an excise manufacturer licence
- to lodge an excise return
- to keep complete and accurate records of your supplies if you manufacture, store or deliver LPG or LNG from a licensed premises, for non-transport use.
Application of excise remission
An automatic remission can only be applied to LPG and LNG fuel that you:
- deliver for non-transport use into different tanks (from the tanks that any transport gaseous fuel is delivered into)
- invoice separately.
Invoices for supply of non-transport LPG
If you supply bulk non-transport LPG that hasn't had excise or customs duty paid on it, you must include the following notice on the tax invoice for the sale:
'Not to be used, or supplied, for transport use. Penalties apply.'
If you receive bulk non-transport LPG that was subject to an automatic remission and hasn't had excise or customs duty paid on it, penalties will apply if you:
- use or supply it for transport (other than in forklifts)
- on-supply it without including the above notice on your invoice.
Using the LPG notice on your invoices
You don't need to include this notice on the invoice if:
- you deliver the LPG in or into containers of 210 kg capacity or less
- you deliver the LPG for residential use and it is not intended for use in carrying on an enterprise
- it's an underbond sale (for example the LPG has been sold to another licensed entity)
- you export the LPG.
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Mixed-use supplies of LPG or LNG
If you receive underbond LPG or LNG for mixed use (for both transport and non-transport use) you must:
- clearly identify the transport and non-transport LPG or LNG supplies
- lodge an excise return and pay excise duty on the transport LPG or LNG fuel
- report on the non-transport LPG or LNG you have used or delivered into the Australian domestic market, if we request it as part of your periodic settlement permission
- keep records of your supplies of non-transport LPG or LNG.
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Storage of delivered supplies of LPG or LNG
If you don't hold an excise licence, you're required to keep supplies of transport gaseous fuel that are duty paid in separate tanks from non-transport supplies subject to remission.
If you only have one tank, then you need to receive and store the entire amount as duty paid transport fuel. That is, you will need to make sure that the LPG or LNG has had excise included for the gaseous fuels:
- you will be using for transport purposes
- used for non-transport purposes.
You may need an excise licence to mix transport and non-transport fuel in the one tank. We consider that to be blending and, in most cases, we treat it as excise manufacture.
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Non-transport CNG
All non-transport CNG is exempt from excise obligations and excise duty.
If you manufacture, store or sell CNG only for non-transport use, there are no obligations to be excise-licensed, report to us and keep records of your supplies.
CNG is also exempt from excise when compressed for use:
- other than as a fuel for a motor vehicle
- other than in the course of carrying on an enterprise
- as a fuel in a motor vehicle when CNG is compressed at a residential premises where both the following apply
- you use equipment capable of compression at a rate not more than 10 kilograms of natural gas per hour
- it's not for sale
- in a forklift.
Mixed-use supplies of CNG
If you receive underbond CNG for mixed use (for both transport and non-transport use) you must:
- clearly identify the transport and non-transport CNG fuel supplies
- lodge an excise return and pay excise duty on the transport CNG.
Find out about:
See also:
- EXC 2016/9 – Excise (Mass of CNG) Determination 2016 (No.2) (for approved apportionment methods if your equipment can't differentiate quantities of transport CNG from non-excisable CNG produced or natural gas used).
Businesses that manufacture or store gaseous fuels in Australia need to understand their excise obligations. Obligations vary depending on the type of fuel and whether its use will be for transport or non-transport purposes.