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  • Calculating the excise duty payable on excisable fuel blends

    This information will help you work out the excise duty payable on excisable fuel blends.

    General calculation

    Generally, the total volume of a fuel blend will be subject to excise duty less any duty that has previously been paid on any fuel blend components, that is less any:

    • customs duty already paid on imported fuels (except biofuels)
    • excise duty on excisable fuels.

    Special calculation for blends containing biofuels

    Where a component of the blended fuel is an imported biofuel, the amount of duty payable on the biofuel component is equal to the full petrol/diesel excise rate.

    To work out the amount of duty you can deduct for blends that contain duty paid biofuels (biodiesel or fuel ethanol), you can only use the excise duty rate for the biofuel multiplied by the quantity of biofuel.

    Example 1: Biodiesel blended with underbond diesel

    All Seasons Fuel Blenders (ASFB) operate a licensed site where they blend biodiesel with underbond diesel.

    ASFB buys 20,000 litres of imported and customs duty-paid biodiesel. The customs duty for the biodiesel was $8,460 (20,000 litres × $0.423). They then blend the biodiesel with the 80,000 litres of underbond diesel on 15 May 2020.

    ASFB delivers the 100,000 litres of B20 (20% biodiesel and 80% diesel) on 22 May 2020 under their periodic settlement permission (PSP).

    When calculating their excise duty liability, they:

    • multiply the volume of diesel by the excise duty rate for diesel (80,000 litres × $0.423 = $33,840)
    • multiply the volume of biodiesel by the excise duty rate for biodiesel (20,000 litres × $0.111 = $2,220).

    ASFB can deduct duties already paid on a component of the blend. However, in calculating the duty already paid, they must treat the biodiesel as excisable even though it was imported and has a higher customable rate.

    As the excise duty rate for biodiesel is $0.111 on 15 May 2020, they can only have a deduction of (20,000 × $0.111 = $2,220).

    Therefore, total excise duty of $33,840 ($33,840 + $2,220 - $2,220) is payable on the 100,000 litres of B20 delivered.

    End of example

    This example applies equally to imported fuel ethanol.

    The excisable components of a blend must be duty paid if applicable, even if the:

    • resulting blend is not excisable under the Excise Tariff Act
    • process undertaken is not excise manufacture.

    This means that if you blend underbond excisable fuel, it must occur at a licensed premises and you must pay excise duty on the excisable fuel components either:

    • before you blend them
    • as stated in your periodic settlement permission (PSP).

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    Last modified: 15 Sep 2020QC 63572