ATO Interpretative Decision

ATO ID 2008/48 (Withdrawn)

Excise

Product Stewardship for Oil Scheme: de-mineralisation
FOI status: may be released
  • This ATO ID is withdrawn as the issue is now covered by PGBR 2012/1, which issued on 12 September 2012.
    This document has changed over time. View its history.

Status of this decision: Decision withdrawn 17 January 2019.
CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Is used oil 'de-mineralised' for the purposes of item 5 of the table in subregulation 4(1) of the Product Stewardship (Oil) Regulations 2000 (PSO Regulations) where metallic and non-metallic contaminants are removed only by a filtration process?

Decision

No. Used oil is not de-mineralised for the purposes of item 5 of the PSO Regulations (item 5) where metallic and non-metallic contaminants are removed only by a filtration process.

Facts

An entity uses oil in the operation of its plant and equipment.

After use the oil becomes contaminated with water, metallic and non-metallic substances.

The entity recycles some of the contaminated oil.

Under the recycling process the water is removed by distillation and the metallic and non-metallic substances are extracted by a filtration process.

Reasons for Decision

Section 9 of the Product Stewardship (Oil) Act 2000 (PSO Act) provides that an entity is entitled to a product stewardship (oil) benefit for the sale or consumption of recycled oil that the entity has recycled in Australia.

The amount of benefit is calculated in accordance with the table in subregulation 4(1) of the PSO Regulations.

Item 5 provides a benefit for recycled oils that are high grade industrial burning oils, that have been filtered, de-watered and de-mineralised.

Item 5 can be contrasted to item 6 of the table in subregulation 4(1) of the PSO Regulations (item 6) which provides a benefit for low grade industrial burning oils that have been filtered and dewatered.

The term 'de-mineralised' is not a defined term of the PSO Regulations. The Australian Oxford Dictionary, 2004, 2nd edn, Oxford University Press, Melbourne defines demineralise (sic) as 'remove salts from (sea water etc)'. In the context of waste oil recycling the Department of the Environment, Water, Heritage and the Arts describes (at www.oilrecycling.gov.au/what-happens.html) the processes involved in recycling oil and includes filtering and demineralisation. The description of filtering and demineralisation includes the following:

The purpose of filtering and demineralisation is to remove inorganic materials and certain additives from used oil to produce a cleaner burner fuel or feed for re-refining.

Used oil feedstock is transferred to a reaction tank (A) and mixed with a small quantity of sulphuric acid and heated to about 60oC. A chemical surface-active reagent, called a surfactant, is added to the reactor (A) and after stirring the mixture is allowed to stand. This allows the mixture to separate into two "phases" - i.e. oil and water-based or aqueous. The reagent causes the contaminants to accumulate in the aqueous phase, which settles to the bottom of the tank (A) and is drained off as slurry. This phase contains acid, used oil contaminants, including metals and some of the oil additives. The water is dried off, leaving a solid waste that must be disposed of.

The demineralised oil is filtered (B) to remove suspended fine particles (to solid waste) and run off to storage (C) as a clean burner fuel. It can be further diluted or "cut" with a lighter petroleum product (called cutter stock) to produce a range of intermediate to light fuel oils depending on the fuel viscosity requirements of the burner.

It can be seen from the above that the term 'de-mineralisation' has a particular meaning within the oil recycling industry. It can also be seen that in the PSO Regulations filtering and de-mineralising are considered to be different processes otherwise there would effectively be no difference between items 5 and item 6.

Where contaminants are removed from used oil only by filtering this does not constitute de-mineralisation for the purposes of item 5.

Therefore used oil is not de-mineralised for the purposes of item 5 where metallic and non-metallic contaminants are removed by a filtration process.

Date of decision:  22 February 2008

Legislative References:
Product Stewardship (Oil) Act 2000
   section 9

Product Stewardship (Oil) Regulations 2000
   subregulation 4(1)

Other References:
Department of the Environment, Water, Heritage and the Arts 2004, Department of the Environment, Water, Heritage and the Arts, Canberra, viewed 25 January 2008, http://www.oilrecycling.gov.au/what-happens.html
The Australian Oxford Dictionary, 2004, 2nd edn, Oxford University Press, Melbourne

Keywords
Excise
Product stewardship oil scheme
PSO recycling

Siebel/TDMS Reference Number:  4834424

Business Line:  Indirect Tax

Date of publication:  4 April 2008

ISSN: 1445-2782

history
  Date: Version:
  22 February 2008 Original statement
You are here 17 January 2019 Withdrawn