Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)General outline and financial impact
Diesel and Like Fuels Rebate Scheme
The Customs and Excise Amendment (Diesel Fuel Rebate Scheme) Bill 1999 (this Bill) extends the existing Diesel Fuel Rebate Scheme, from 1July 2000 until 30 June 2002, for certain additional categories of applicant. The rebate will be available for the use of diesel fuel and like fuels. Like fuels will be prescribed.
The rebate will be extended to include diesel and like fuels used in:
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- marine uses; and
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- rail transport.
The rebate is currently available for off-road uses including in:
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- mining;
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- agriculture;
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- bush and other nursing homes;
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- hospitals; and
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- aged persons homes.
Date of effect: This Bill will commence from 1 July 2000, so that the extended rebate will be available for fuel purchased for use on or after 1July2000. The rebate will not be available for fuel purchased for use after 30June2002, when it is intended that it will be replaced by a new Energy Grants (Credits) Scheme.
Proposal announced: Announced by the Government on 28 May 1999.
Financial impact: The expansion of the Diesel Fuel Rebate Scheme will cost an additional $420 million in the 2000-01 financial year, and $480 million in the 2001-02 financial year.
Compliance cost impact: Medium
The amendments to the rebate scheme will have little effect on those currently entitled to a rebate under the scheme. Those categories of users presently entitled to claim a rebate are already required to keep records to substantiate their claim. The substantiation requirements for those entitled to claim the rebate as a consequence of these amendments will be the same as for those previously entitled.
Application: The rebate will be available for fuel purchased for use between 1July2000 and 30June2002. It is intended that from 1July2002 the Diesel Fuel Rebate Scheme will be replaced by an Energy Grants (Credits) Scheme.
Chapter 1 - Introduction
Overview
1.1 The Customs and Excise Amendment (Diesel Fuel Rebate Scheme) Bill 1999 (this Bill) amends the Customs Act 1901 and the Excise Act 1901 for the purpose of extending the Diesel Fuel Rebate Scheme (DFRS).
1.2 In particular, this Bill extends the existing scheme in order to provide a diesel fuel rebate for purchases of diesel and like fuels where that fuel is for use in:
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- rail transport in the course of carrying on an enterprise; or
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- marine use in the course of carrying on an enterprise.
Outline to this Explanatory Memorandum
1.3 Chapter 1 of this Explanatory Memorandum (this Chapter) provides the background to the rebate scheme and the purpose of the legislation.
1.4 Chapter 2 provides an explanation of the specific amendments to the Customs Act 1901. The provisions dealing with amendments to the Customs Act are found in Schedule 1 to this Bill.
1.5 Chapter 3 provides an explanation of the specific amendments to the Excise Act 1901. The provisions dealing with the amendments to the Excise Act 1901 are found in Schedule 2 to this Bill.
Background to the grants scheme
1.6 The existing DFRS provides a rebate for the excise paid on diesel fuel purchased for use in mining, primary production, at a hospital, at a nursing home, at an aged persons home and for certain residential power generation. The DFRS does not currently provide a rebate of the excise for diesel or like fuel used in rail transport or for marine use, other than fishing.
1.7 The extended DFRS rebate will be available for fuel purchased for use on or after 1July2000 but before 1July2002.
1.8 This Bill will provide a rebate for diesel and other like fuel, for an extended group of off-road uses, where the fuel is used for the purpose of carrying on an enterprise. This Bill will specifically extend the current scheme to provide a rebate for rail transport and for marine use where those uses are in the course of carrying on an enterprise. All existing categories of DFRS rebates will at least retain their existing entitlement.
Chapter 2 - Amendments to the Customs Act 1901
Overview
2.1 The extension of the existing Diesel Fuel Rebate Scheme (DFRS) requires certain specific amendments to be made to the Customs Act 1901 to include additional categories of rebate recipient. These are identified below.
2.2 This Bill will insert a new definition of diesel fuel in subsection4(1) to expand the category of fuel that is eligible for the rebate from diesel fuel to diesel and like fuels. [Clause 1]
2.3 This Bill will insert a new subsection 164(1AB) , outlining the period for which the amended DFRS will operate. Specifically the new paragraph will ensure that a rebate under the DFRS is not payable:
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- for a purchase of diesel fuel on or after 1 July 2002; or
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- as a result of an application received more than 5 months after 1July 2002. [Clause 2]
2.4 This Bill will amend subsection 164(1) to expand the list of categories for which a rebate under the DFRS will be available. The amendments will insert additional categories into the list to include applicants who have purchased fuel for use in:
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- rail transport in carrying on an enterprise; or
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- marine use in carrying on an enterprise.
[Clause 3]
Additional categories of rebate payable
2.5 This Bill will amend subsection 164(5) to expand the list of rebate rates payable for the various categories of rebate applicants to include rates for the new categories. [Clause 5] The amount of rebate payable for diesel and like fuel use in the new categories is the customs duty paid on the fuel.
Distinction between forestry and primary production
2.6 This Bill will insert new subsections 164(5AAA) and (5AAB). The subsections will specifically provide for the Minister, in declaring the rates of rebate that will be payable, to be able to declare a rate for forestry which is different from the rate for primary production. [Clause 6]
2.7 The rate of rebate declared for forestry must always be 35/43 of the primary production rate. This provision ensures that the rebate amount for forestry is maintained at approximately the same proportion it is of the current rebate. [Clause 6]
Entitlement under two categories
2.8 This Bill will insert a new subsection 164(5AC) to provide that if you are entitled to the rebate under more than one category, for example for both mining and marine use, you are entitled to the greater rate of rebate. [Clause 7]
2.9 This Bill will insert a definition of carrying on an enterprise into subsection 164(7). This definition is required because, for rail transport and marine use, a rebate applicant must have used fuel in carrying on an enterprise (see paragraph 2.4). [Clause 8]
2.10 This Bill will insert a definition of marine use into subsection 164(7). [Clause 9]
2.11 This Bill will insert a definition of rail transport into subsection 164(7). [Clause 10]
Chapter 3 - Amendments to the Excise Act 1901
Overview
3.1 The extension of the existing Diesel Fuel Rebate Scheme (DFRS) requires certain specific amendments to be made to the Excise Act 1901 to include additional categories of rebate recipient. These are identified below.
3.2 This Bill will insert a new definition of diesel fuel in subsection4(1) to expand the category of fuel that is eligible for the rebate from diesel fuel to diesel and like fuels. [Clause 1]
3.3 This Bill will insert a new subsection 78A(1AB) , outlining the period for which the amended DFRS will operate. Specifically the new paragraph will ensure that a rebate under the DFRS is not payable:
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- for a purchase of diesel fuel on or after 1 July 2002; or
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- as a result of an application received more than 5 months after 1July 2002.
[Clause 2]
Additional categories of rebate applicants
3.4 This Bill will amend subsection 78A(1) to expand the list of applicants who are eligible to apply for a rebate under the DFRS. The amendments will insert additional categories into the list to include applicants who have purchased fuel and use it:
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- in rail transport in carrying on an enterprise; or
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- in marine use in carrying on an enterprise.
[Clause 3]
Additional categories of rebate payable
3.5 This Bill will amend subsection 78A(5) of the Excise Act 1901 to expand the list of rebate rates payable for the various categories of rebate applicants to include rates for the new categories. [Clause 5] The amount of rebate payable for diesel and like fuel use in the new categories is the excise paid on the fuel.
Distinction between forestry and primary production
3.6 This Bill will insert new subsections 78A(5AAA) and (5AAB) . The subsections will specifically provide for the Minister, in declaring the rates of rebate that will be payable, to be able to declare a rate payable for forestry which is different from the rate payable for primary production. [Clause 6]
3.7 The rate of rebate declared for forestry must always be 35/43 of the primary production rate. This provision ensures that the rebate amount for forestry is maintained at approximately the same proportion as the current rebate. [Clause 6]
3.8 This Bill will amend subsection 78A(7) to add definitions for marine use and rail transport. [Clause 8]
Entitlement under two categories
3.9 This Bill will insert new subsection 78A(5AC) to provide that if you are entitled to the rebate under more than one category, for example for both mining and marine use, you are entitled to the greater rate of rebate. [Clause 7]
3.10 This Bill will insert a definition of carrying on an enterprise into new subsection 78(8) . This definition is required because, for rail transport and marine use, a rebate applicant must have used fuel in carrying on an enterprise (see paragraph 3.4). [Clause 9]