Excise guidelines for the fuel industry

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06 PAYMENT OF DUTY

6.1 PURPOSE

6.2 INTRODUCTION

6.3 POLICY AND PRACTICE

6.3.1 WHEN IS DUTY PAYABLE?

6.3.2 WHEN IS DUTY PAYABLE UNDER A PERIODIC SETTLEMENT PERMISSION?

6.3.3 WHEN IS DUTY PAYABLE UNDER PREPAYMENT OF EXCISE DUTY?

6.3.4 WHEN IS DUTY NOT PAYABLE?

6.3.5 HOW DO I WORK OUT THE AMOUNT OF DUTY TO PAY?

6.3.6 WHAT DO I DO IF I HAVE A DISPUTE AS TO THE DUTY?

6.3.7 DO I HAVE TO ACCOUNT FOR EXCISABLE FUEL PRODUCTS?

6.4 PROCEDURES

6.4.1 HOW DO I GET A PERIODIC SETTLEMENT PERMISSION (PSP)?

6.4.2 WHAT DOES MY PSP INCLUDE?

6.4.3 WHAT MUST I DO TO DELIVER FUEL PRODUCTS INTO THE AUSTRALIAN DOMESTIC MARKET?

6.4.4 HOW DO I LODGE EXCISE RETURNS AND PAY EXCISE DUTY?

6.4.5 WHAT DO I DO IF I HAVE MADE AN ERROR ON MY EXCISE RETURN?

6.4.6 WHAT DO I DO IF I NEED MORE INFORMATION?

6.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO PAYMENT OF DUTY?

6.6 TERMS USED

6.7 LEGISLATION (quick reference guide)

6.7.1 Excise Act 1901

6.7.2 Excise Tariff Act 1921

6.7.3 Crimes Act 1914

6.7.4 Income Tax Assessment Act 1997

6.7.5 Taxation Administration Act 1953

6.1 PURPOSE

This chapter deals with:

  • when duty is payable
  • when duty is payable under periodic settlement
  • when duty is payable under prepayment of excise duty
  • when duty is not payable
  • how to work out the amount of duty you're liable to pay, including tariff proposals and quotas
  • what to do if you have a dispute as to the duty
  • whether you have to account for excisable fuel products
  • how to get a Periodic Settlement Permission (PSP)
  • what your PSP will include
  • what to do to deliver fuel products into the home consumption
  • how to lodge excise returns and pay excise duty
  • what to do if you have made an error on your excise return, and
  • penalties that can apply to offences in relation to payment of duty.

6.2 INTRODUCTION

Excise duty is imposed at the time of manufacture of excisable fuel products . [114] However, the duty is not required to be paid at the time of manufacture.

This chapter focuses on the payment of duty and the factors that influence when and how much duty is payable.

To ensure the duty is ultimately acquitted, excisable fuel products remain subject to our control until they are delivered:

  • into home consumption, or
  • for export to a place outside Australia. [115]

The liability for duty, imposed at the time of manufacture, can be acquitted by:

  • payment of the duty
  • export of the goods
  • remission, or
  • use of the goods in the manufacture of other excisable goods.

Alternatively the liability can be transferred with the goods if they are sold while underbond.

6.3 POLICY AND PRACTICE

6.3.1 WHEN IS DUTY PAYABLE?

When the liability for duty becomes payable depends on how authority is given to deliver the excisable fuel products into home consumption. Authority to deliver excisable fuel products into home consumption can be given on a continuing basis, known as a PSP, [116] or on an ad hoc basis, known as prepayment of duty. [117]

6.3.2 WHEN IS DUTY PAYABLE UNDER A PSP?

Under a PSP the duty is paid after the excisable fuel products are delivered into home consumption.

To understand when the duty is paid in the case of periodic settlement requires an understanding of what the permission is and what your obligations are under such permission.

A PSP allows you to report deliveries and to pay duty on a periodic basis after the goods have been delivered into home consumption. [118] Periodic settlement is the most common arrangement for the delivery of goods into the home consumption.

You may apply for a PSP that covers any recurring seven-day reporting period. [119] You may specify in your application the 7 day period you wish to use, for example, Wednesday to Tuesday. [120] The application must be made on the approved form [121] .

You may apply for a monthly PSP if you are either:

  • a small business entity; [122] or
  • included in a particular class of business or you deliver goods that are of a particular kind [123] .

A 'small business entity' is a business with an aggregated turnover for the previous year of less than $2 million or is likely to have an aggregated turnover for the current year of less than $2 million. [124]

  • The class of business or particular kind of goods must be prescribed in the Excise Regulation 2015.

Stabilised crude oil and condensate are currently prescribed in the Excise Regulation as being goods for which a person may apply for a PSP in respect of a calendar month. If a person is granted a PSP in respect of a calendar month, they will be required to give the Collector a return, in an approved form, on the day of each month specified in the PSP. The return must contain details of goods that have been delivered into home consumption under the PSP in the preceding month. [125]

A PSP is given in writing and includes:

  • your name as the holder of the PSP
  • the kind of goods to which the PSP applies
  • the place from which the goods may be delivered
  • the start date of the PSP and whether it is for a seven-day or monthly period;
  • the seven-day period specified, and
  • any special requirements of the periodic settlement. [126]

In considering your application for a PSP we will take into account various issues including compliance with the law and the protection of the excise revenue. We will also consider whether you have complied with the requirements of any previous permission you have been given. If we refuse to give a PSP we will issue you a notice in writing setting out the reasons for the refusal. [127]

A decision we make in relation to the period of a PSP or any condition for a PSP is a reviewable decision. [128]

For information about your review rights refer to Chapter 8 - Reviews and objections.

If you have a seven-day PSP for a fuel that is other than CNG, LNG or LPG, you must:

  • lodge an excise return , on the first business day following the end of the seven-day period, specified in your PSP. The excise return details the goods you have delivered into home consumption during the settlement period, and
  • at the time you lodge your return, pay any duty at the rate applicable when the goods were delivered into home consumption. [129]

A 'business day' is a day that is not a Saturday or Sunday or a public holiday in the place where you lodge your return.

If you have a seven-day PSP for CNG, LPG or LNP the same requirements apply however you must give us a return and pay any excise duty on or before the 6 th business day following the end of the seven-day period. [130]

If you have a monthly PSP the same requirements apply however you must give your return and pay any excise duty on or before the 21 st day of month following the end of the monthly period. [131]

If you have a monthly permission because you are in a class of persons prescribed in the regulations of the Excise Act or because you deliver goods into home consumption of a kind prescribed, then the regulations of the Excise Act can impose alternative conditions.

We may also determine a different PSP period if:

  • you do not have any excise duty to pay [132] ; or
  • you are a small business and have a PSP for a monthly period and have advised us in writing that the business has ceased to be a small business [133] ; or
  • the business is included in a particular class of business and have a PSP for a monthly period and have advised us in writing that the business has ceased to be included in the class [134] .

If we determine a different PSP period we will advise you in writing that your PSP is revoked from the day specified in the notice. We will give you another PSP for a seven-day period [135] .

If you advise us in writing that you wish to change the period of your PSP, we may, in writing, revoke your current PSP and give you another permission for the preferred period. We will notify you of the day the change comes into effect. [136]

You do not need to have an excise licence to have a PSP.

Example 6A

Buy Me Pty Ltd (Buy Me) does not hold an excise licence and does not qualify as a small business entity. A licensed manufacturer manufactures excisable fuel products for Buy Me under contract. The fuel products are not of a particular class of goods prescribed in the Excise Regulation. Buy me is also not included in a class of person prescribed in the Excise Regulation.

Under the terms of the contract, Buy Me has title to the goods from the time of manufacture and will pay the excise duty.

Buy Me applied for, and was granted, a seven-day PSP for the period Tuesday to Monday.

Therefore, Buy Me is able to arrange delivery of the excisable fuel products into home consumption and defer payment of excise duty, on those goods, until after the end of period. On the first working day after the end of the period (i.e. Tuesday, unless it is a public holiday in which case it will be due on Wednesday) Buy Me must lodge an excise return for any excisable fuel products delivered during the period and pay the excise duty owing on those goods.

We will send Buy Me written confirmation, after the excise return has been processed.

6.3.3 WHEN IS DUTY PAYABLE UNDER PREPAYMENT OF EXCISE DUTY?

Under prepayment, the duty is paid before the excisable fuel products are delivered into home consumption.

If you do not hold a PSP, you must receive a Delivery authority from us before you are allowed to deliver the excisable fuel products into home consumption. We require you to pay any applicable duty before we give you a Delivery authority . To request a Delivery authority you need to lodge an excise return (NAT4285).

That is, you must:

  • lodge an excise return
  • pay the relevant duty, and
  • receive a Delivery authority from us. [137]

You must not deliver excisable fuel products into home consumption before receiving the Delivery authority .

6.3.4 WHEN IS DUTY NOT PAYABLE?

There are circumstances in which no duty will be payable. These include where:

  • goods are classified to an item or subitem with a FREE rate of duty
  • goods are exported
  • an exemption circumstance applies
  • a remission circumstance applies, or
  • excisable fuel products that are subject to our control are used in the manufacture of other excisable fuel products.

6.3.5 HOW DO I WORK OUT THE AMOUNT OF DUTY TO PAY?

To work out how much duty you need to pay you will need to:

(i)       check whether your fuel products are excisable fuel products according to the Schedule to the Excise Tariff Act 1921 (Excise Tariff Act) [138] and identify the correct duty rate

(ii)     work out the quantity of fuel products subject to duty, in each tariff subitem, that you deliver into home consumption

(iii) multiply the quantity of fuel products by the rate of duty on the excisable fuel products, and

(iv) add up the total for each subitem to work out total duty to be paid.

(i) Classifying excisable fuel products

The Schedule to the Excise Tariff Act (Schedule) lists those goods that, if manufactured or produced in Australia, are subject to excise. The Schedule also contains the rate of duty applicable to the goods. For excisable fuel products the relevant part of the Schedule is as follows:

Tariff Item  

Subitem  

Description of Goods

Rate*

10  

Goods as follows:

(a) petroleum condensate and stabilised crude petroleum oil for use otherwise than:

(i) in the recovery, production, pipeline transportation or refining of petroleum condensate or stabilised crude petroleum oil; or

(ii) as feedstock at a factory specified in a licence granted under Part IV of the Excise Act 1901;

(b) topped crude petroleum oil;

(c) refined or semi-refined liquid products derived from petroleum, other than such products for use (other than in an internal combustion engine) in refining petroleum condensate or stabilised crude petroleum oil;

(d) liquid hydrocarbon products derived through a recycling, manufacturing or other process;

(da) liquefied petroleum gas

(db) liquefied natural gas

(dc) compressed natural gas

(e) denatured ethanol for use as fuel in an internal combustion engine;

(f) biodiesel

(g) blends of 1 or more of the above goods (with or without other substances), other than blends covered by subsection 77H (1), (2A), (2B) or (3) of the Excise Act 1901 ;

but not including the following:

(h) goods classified to item 15;

(i) waxes,and bitumen  

(j) good covered by section 77HA or 77HB or the Excise Act 1901

10.1  

Petroleum condensate  

$0.389 per litre  

10.2  

Stabilised crude petroleum oil  

$0.389 per litre  

10.3  

Topped crude petroleum oil  

$0.389 per litre  

10.5  

Gasoline (other than for use as fuel in aircraft)  

$0.389 per litre  

10.6  

Gasoline for use as fuel in aircraft  

$0.03556 per litre  

10.7  

Blends of gasoline and ethanol  

The amount of duty worked out under section 6G  

10.10  

Diesel (other than biodiesel)  

$0.389 per litre  

10.11  

Blends of diesel and ethanol  

The amount of duty worked out under section 6G  

10.12  

Blends of diesel and biodiesel  

The amount of duty worked out under section 6G  

10.15  

Heating oil  

$0.389 per litre  

10.16  

Kerosene (other than for use as fuel in aircraft)  

$0.389 per litre  

10.17  

Kerosene for use as fuel in aircraft  

$0.03556per litre  

10.18  

Fuel oil  

$0.389 per litre  

10.19A

Liquefied petroleum gas, other than liquefied petroleum gas exempted from excise duty by section 77HB of the Excise Act 1901

$0.102 per litre

10.19B

Liquefied natural gas, other than liquefied natural gas exempted fro excise duty by section 77HB of the Excise Act 1901

$0.213 per kilogram

10.19C

Compressed natural gas, other than compressed natural gas exempted from excise duty by section 77HA of the Excise Act 1901

$0.213 per kilogram

10.20  

Denatured ethanol for use as fuel in an internal combustion engine  

$0.389 per litre  

10.21  

Biodiesel  

$0.389 per litre  

10.25  

Liquid aromatic hydrocarbons consisting principally of benzene, toluene or xylene or mixtures of them (other than goods covered by section 77J of the Excise Act 1901)  

$0.389 per litre  

10.26  

Mineral turpentine (other than goods covered by section 77J of the Excise Act 1901)  

$0.389 per litre  

10.27  

White spirit (other than goods covered by section 77J of the Excise Act 1901)  

$0.389 per litre  

10.28  

Petroleum products (other than blends) not elsewhere included (other than goods covered by section 77J of the Excise Act 1901)  

$0.389 per litre  

10.30  

Blends of 1 or more of the above goods (with or without other substances) not elsewhere included that can be used as fuel in an internal combustion engine (other than goods covered by section 77J of the Excise Act 1901)  

The amount of duty worked out under section 6G  

15  

Goods as follows, other than:

(a) goods for use as a fuel; and

(b) exempt oils and hydraulic fluids  

15.1  

Petroleum-based oils (including lubricant/fluid/oil products) and their synthetic equivalents but not greases  

$0.085 per litre  

15.2  

Petroleum-based oils (including lubricant/fluid/oil products and greases) and their synthetic equivalents, recycled for use as oils (including lubricant/fluid/oil products) but not greases  

$0.085per litre  

15.3  

Petroleum-based greases and their synthetic equivalents  

$0.085 per kilogram  

15.4  

Petroleum-based oils (including lubricant/fluid/oil products and greases) and their synthetic equivalents, recycled for use as greases  

$0.085 per kilogram  

  • *Rate of duty as at 1 April 2015. Rates for fuel and petroleum products (other than aviation fuels) were increased on 10   November 2014 and 2   February 2015 by a Tariff proposal that requires ratification prior to 30   October 2015 to give full effect for future years. If ratified, the indexation provisions impose biannual indexation of excise rates for fuel and petroleum products (other than aviation fuels) in line with the consumer price index - generally on 1   February and 1   August each year.

For the current rates of duty, refer to the Schedule under Excise Tariff Working Pages on our website at www.ato.gov.au

(ii) Working out quantities of excisable fuel products

We measure fuel quantity in litres or, in some cases, kilograms. However, the volume of fuel varies with temperature.

To work out your fuel quantity for excise duty purposes, volume is generally used and must be measured at a temperature of 15 degrees Celsius, which is an industry standard, and the quantity rounded to the nearest whole litre.

The method used to calculate the litres figure is the standard conversion of a weight measurement, which is to take the weight and divide it by the density corrected to 15 degrees Celsius.

For more information on measuring the volume of liquid fuels please refer to Excise (Volume of Liquid Fuels - Temperature Correction) Determination 2011 (No 1) .

If you are dealing with LPG there are other factors to be considered when determining volume. These factors can include the density and vapour pressure.

For more information on measuring the volume of LPG please refer to Excise (Volume of LPG - Temperature and Pressure Correction) Determination 2011 (No. 1) .

The fuel quantity of CNG is measured in kilograms for excise purpose. If you are dealing with CNG which is measured via a different method (either volume or energy value), there are factors to be considered when determining the mass.

For more information on determining the mass of CNG please refer to Excise (Mass of CNG) Determination 2012 (No. 1).

You may have instances when product is invoiced in kilograms and you then need to convert the quantity to litres to:

  • record it in your stock records, and
  • include on an excise return, when delivered into home consumption.

The method used to calculate the litres figure is the standard conversion of a weight measurement to a liquid measurement, which is to take the weight and divide it by the density corrected to 15 degrees Celsius.    

Example 6B

100 kilograms of fuel oil having a density of 0.94 at 15 degrees Celsius converts to 106 litres:

                                              100 / 0.94 = 106.38 rounded to 106 litres

(iii) Calculating duty payable on each excisable fuel product

The rate of duty is set out in the Schedule to the Excise Tariff Act.

The rate of duty you use is the rate contained in the working tariff for the subitem. It will also depend on whether you have a PSP. If you do it is the rate applicable at the time you deliver the excisable fuel products into home consumption. If you do not have a PSP, then it is the rate applicable at the time you make the pre-payment. [139]

The excise duty rates used were current at the time of publication.

For the current rates of duty, refer to the Schedule under Excise Tariff Working Pages on our website at www.ato.gov.au

Example 6C

When goods are delivered into home consumption under a PSP, the rate of duty that applies is the rate in force at the time the goods are delivered.

On 3 August 2014 a manufacturer delivers lubricating oil under its PSP.

The lubricating oil is classified to subitem 15.1 of the Excise tariff.

The rate of duty that applies is the rate in force on 3 August 2014- $0.085 per litre.

Example 6D

When goods are delivered into home consumption under a prepayment, the rate that applies is the rate in force at the time payment is made.

On 8 June 2014 a manufacturer that does not hold a PSP prepays duty for a delivery of lubricating oil. The lubricating oil is delivered on 8 June 2014.

The lubricating oil is classified to subitem 15.1 of the Excise tariff.

The rate of duty that applies is the rate in force on 8 June 2014 - $0.05449 per litre.

The amount of duty payable is then calculated by multiplying the quantity of excisable fuel products by the applicable rate of duty.

Example 6E

10,000 litres of diesel are delivered into home consumption on 10   March 2015.

The diesel is classified to subitem 10.10 of the Excise tariff and has a duty rate of $0.389 per litre.

Therefore, the duty payable is 10,000 litres x $0.389 = $3,890.00

(iv) Calculating total duty payable

Duty payments are notified to us by including details on your excise return. Excisable fuel products classified to different items or subitems of the Excise tariff must be shown separately on your excise return on what are referred to as lines.

Example 6F

My Fuel Sales needs to report deliveries of fuel and grease for the period ended 10 March 2015.

On their excise return, My Fuel Sales reports their deliveries and duty liability as:

                     

Line

Tariff item

Quantity

Units

Duty rate

Excise amount

1

10.5

100,000

L

$0.389

$38,900.00

2

15.3

15,000

Kg

$0.085

$1,275.00

TOTAL

$40,175.00

What happens if the rate changes during my settlement period?

If the rates of duty change within your settlement period, you may lodge two excise returns or, alternatively, include separate lines for the same product on one return; that is:

  • one return or line for goods delivered under the old rates, and
  • one return or line for goods delivered under the new rates.

How can the rate change?

The applicable rate of excise duty can also be affected by:

  • changes to the Excise Tariff Act (including tariff proposals), or
  • quotas.

Changes to the Excise Tariff Act

Where the Government decides to change the rate of excise applying to excisable goods, or to apply excise to new goods or stop applying excise to certain goods this requires an amendment to the Excise Tariff Act. The Government normally notifies the intention to do this with a tariff proposal.

Tariff proposals

Tariff proposals are a means of changing the Excise Tariff (rates can be adjusted up or down; products can be added or removed). There are specific provisions in the Excise Act that provide for tariff proposals when Parliament is not sitting.

Effectively changes to the Excise Tariff can be notified in the Parliament or, if the Parliament is not sitting, by notice in the Gazette.

The tariff proposal is required to be validated by an Act within12 months giving retrospective effect to the date of the proposal.

You cannot commence proceedings against us for any action taken to collect the amount set by the tariff proposal during the periods specified in section 114 of the Excise Act. [140]

Effectively this means you need to pay in line with a tariff proposal. Any increases in rates or introduction of new products through a tariff proposal technically does not impose excise but we will protect the revenue by collecting amounts in line with the proposal.

If an amending Act validating the changes outlined within the tariff proposal is not passed within the prescribed periods, then any additional amounts will be refunded.

On 30 October 2014 the Government introduced Excise Tariff Proposal (No. 1) 2014 (and Customs Tariff Proposal (No. 1) 2014) into Parliament. The result was an increase in the excise (and excise equivalent customs) duty rates for all fuels (other than aviation fuel) from 10 November 2014 and the application of indexation increases to fuel in February and August 2015. For the rates increases to continue (and those already imposed remain) the tariff proposals must be ratified by Parliament within 12 months of introduction.

Quotas

Quotas are a means of ensuring that people cannot gain an advantage by anticipating rises in excise rates and then delivering more excisable fuel products than they would normally. Effectively quotas restrict the quantity of excisable fuel products you can deliver into home consumotion at the existing excise rate. If you exceed your quota for the period you will need to pay the duty at the new rate.

Where we believe that persons are anticipating an increase in the rate of duty, and as a result clearances of excisable fuel products in a particular period, is likely to be greater than it otherwise would be, we will publish a notice in the Commonwealth Gazette . This notice will state that a particular period is a 'declared period'. [141]

The 'declared period' is the period during which quotas will operate. To establish what your quota is we will consider the amounts of your past deliveries. [142]

Once we have established your quota we will give you a written quota order that specifies the maximum level (which can be nil) [143] of excisable fuel products that you can deliver into home consumption at the applicable excise rate in force during the declared period.

If at anytime during the declared period you exceed your quota you are required to pay the duty on the excess goods at the existing rate, and in addition we may require you to pay a security, by cash deposit, equal to the duty on the excess goods. [144]

At the end of the declared period we will reconcile your deliveries with your quota. If you delivered into home consumption more than your quota allowed, then the duty for the amount in excess of the quota is calculated at the rate in force the day after the declared period ends. Therefore if the rate has gone up you will pay the higher rate of duty on the amount in excess of your quota.

We can vary or revoke a quota order any time before the end of the declared period or 60 days after the making of the quota order whichever occurs last.

For more information about our role in determining and applying quotas refer to Practice Statement Law Administration 2012/3: The ATO role in determining and applying quotas under the Excise Act 1901.

6.3.6 WHAT DO I DO IF I HAVE A DISPUTE AS TO THE DUTY?

If you dispute: [145]

  • the amount of duty
  • the rate of duty, or
  • the liability of goods to duty (for example, whether the goods are excisable)

you may deposit with us the amount of duty demanded.

The deposit of this duty is to be made on an excise return. The excise return should be accompanied by a letter which sets out the details of the dispute. Upon receipt of the amount deposited we will authorise delivery of the goods. You have 6 months after making the deposit to commence court action. If that action is decided in your favour we are obliged to refund you the deposit along with interest of 5% p.a. If the action is not commenced within 6 months or the court does not find in your favour the amount deposited is taken to be the correct amount of duty.

However, you may not commence court action if you have a taxation objection under Part IVC of the Taxation Administration Act 1953 against a private ruling and the matter of the objections:

  • relates to the amount or rate of duty; or
  • the liability of the goods to duty; and
  • the matter of the objection is also in dispute [146] .

Example: 6G

A licensed manufacturer anticipates manufacturing a new type of excisable good. They seek a private ruling as to the rate of duty that would be payable on the good. They do not accept the rate of duty advised by us in a private ruling and they lodge an objection. Subsequently, they commenced manufacture of the excisable goods. They pay the amount of duty at the rate that we claimed was payable in the private ruling, and commence an action against us under section 154 of the Excise Act. Their ability to commence an action under section 154 is limited to matters that are not covered under the objection to the private ruling.

For more information on private rulings see section 8.5.1 - Private Rulings

These disputes do not apply to changes brought about by a tariff proposal.

For more information on tariff proposals see section 6.3.5 - How do I work out the amount of duty to pay?

As authority to deliver the goods is a consequence of making the deposit we consider that this means that section 154 does not apply to goods delivered under a PSP.

Delivery of the goods and payment of interest under Section 154 of the Excise Act do not apply in cases where we are of the opinion that any evasion under the Excise Act has been committed or attempted.

6.3.7 DO I HAVE TO ACCOUNT FOR EXCISABLE FUEL PRODUCTS?

Where you have or had possession, custody or control of any excisable fuel products [147] (subject to excise control), you have to be able to satisfactorily account for them.

If we ask you to account for excisable fuel products, and you cannot satisfactorily do so, then you may be required to pay an amount equal to the duty. If we require this payment you will be given a written demand. The amount you are required to pay is calculated using the rate of duty in force on the day the demand is made.

When requested to account for excisable fuel products you must be able to show that:

  • the goods are still at your premises
  • duty has been paid
  • duty was not payable (for example, where a remission applied), or
  • the goods have otherwise been dealt with in accordance with the excise law (for example, moved under a movement permission or included on an excise return at a concessional rate).

Excisable fuel products will not have been accounted for satisfactorily just because they were:

  • given away for promotional purposes [148]
  • stolen from licensed premises, [149] or
  • delivered into home consumption under the mistaken belief that they were not excisable.

We may also demand payment from you if you have failed to keep excisable fuel products safely (for example, if you have a break-in and a theft occurs, you will be required to pay an amount equal to the duty that would have applied to the excisable fuel products that have been stolen).

Our decision to demand payment is a reviewable decision. [150]

For information about your review rights refer to Chapter 8 - Reviews and objections.

In determining whether you have accounted for the excisable fuel products, we may allow you to offset any stock shortages and surpluses.

Example 6H

My Petroleum Wholesalers is asked to account for their excisable fuel products. They carry out a stocktake and find there is a surplus of 100,000 litres of ULP and a shortage of 200,000 litres of diesel.

We will allow them to offset the surplus and shortage. Therefore, there are 100,000 litres of diesel that have not been accounted for.

A demand will be issued for an amount equal to the excise duty payable on the 100,000 litres.

My Petroleum Wholesalers corrects its book stock to take up the surplus stock of 100,000 litres of ULP and, when the demand is paid, write off the shortage of 200,000 litres of diesel.

Example 6I

Continuing from example 6G, a couple of months later, My Petroleum Wholesalers decides to conduct another stocktake. They find a surplus of 250,000 litres of heating oil and a shortage of 200,000 litres of fuel oil.

They decide to offset the surplus and shortage. Therefore, there are no litres that have not been accounted for but there is a surplus of 50,000 litres.

My Petroleum Wholesalers corrects its book stock to take up the surplus stock of 250,000 litres of heating oil and write off the shortage of 200,000 litres of fuel oil. They do not need to notify us as there has been no shortage in the payment of the duty. If a shortfall had occurred they would need to contact us before the offsetting could occur.

What is the out of period adjustment arrangement?

There are circumstances in which you may make "out of period" adjustments to your excise liability on your excise return without our prior approval.

For example, a periodic settlement permission holder who is eligible for refunds or drawbacks or has underpaid duty in a previous settlement period may be able to use the out of period adjustment arrangement to account for the variations within the current settlement period.

Adjustments covered include refund claims, drawback claims and underpayments of duty. An out of period adjustment report must be lodged with the relevant excise return.

Before you can use the out of period adjustment system you must obtain approval from us.

For more information about the out of period adjustment system, refer to PS LA 2003/1: Excise Duty - Reporting and accounting for debit and credit adjustments outside the current reporting period .

What happens if I return fuel products to underbond stock?

Fuel products that have been delivered into home consumption but returned before the end of the settlement period are not required to be included on the excise return for that period. The product can be returned to underbond stock and treated as though they have never left excise control. Fuel that has been returned to a licensed place during a settlement period that is after the settlement period in which the fuel was delivered, can be included in the out of period adjustment as described above.

6.4 PROCEDURES

6.4.1 HOW DO I GET A PERIODIC SETTLEMENT PERMISSION (PSP)?

If you apply for a manufacturer or storage licence, you can use your application form to indicate whether you intend to pay excise duty either periodically or prior to delivery. You do not need to complete a separate PSP application.

If you do not have a licence, or you originally chose not to pay excise duty periodically, then you should complete an Application for a continuing movement permission (non-export) (NAT 73712) and forward it to us for assessment.

If we approve your PSP, we will notify you in writing within seven days of receiving your request.

A PSP is not transferable to another person and remains in force until revoked.

A request to add or delete delivery establishments from a PSP is treated as if it were a request for a new permission. However, your PSP number will remain unchanged.

We may also:

  • refuse to grant a PSP
  • impose conditions on a PSP, or
  • revoke a PSP.

Failure to comply with a condition may result in the revocation of the PSP. [151] In such an instance, we would take into account a variety of factors, including your payment history.

A decision to refuse or to revoke a PSP is not a reviewable decision. However, there may be other avenues for review, for example you may seek an informal review of our decision.

For information about your review rights refer to Chapter 8 - Reviews and objections .

                                                                                                                                                                                                                                                                                                                                                           

For more information about PSPs, contact us by phoning 1300 137 290.

6.4.2 WHAT DOES MY PSP INCLUDE?

Your PSP in relation to excisable fuel products will include:

  1. permission to deliver excisable fuel products into home consumption
  2. conditions, such as:
  • settlement period - the period specified during which goods can be delivered before a return must be lodged [152]
  • the type of goods that may be delivered from each premises,
  • quantity limits (if any)
  • when you must pay the duty
  • how you must pay - permitted methods (e.g. EFT, cheque, at a Post Office)
  • when and how to lodge your excise return
  • record-keeping requirements
  1. a schedule listing:
  • one or more premises from which deliveries may be made.

Even if you do not deliver into home consumption any excisable product in the period prescribed in your PSP, you must still lodge a return for that prescribed period declaring this by ticking yes the lodgement is for a nil return. Each such return is termed a nil return.

Example 6J

A PSP specifies a settlement period starting on Saturday and ending on Friday. It states that excise returns must be lodged by 4 pm on the first business day after the end of the settlement period. It also says that the duty on deliveries made during the settlement period must be paid at the same time as the excise return is required to be lodged.

An excise return must be lodged and the duty paid by 4 pm on Monday for all goods delivered during the settlement period.

When a public holiday falls on a Monday, the excise return is due for lodgement and duty is to be paid by 4 pm on Tuesday, the next business day.

Where you have deliveries in different states of Australia there may be different public holidays in those states. If your returns are prepared by an office in a state different from that in which the delivery into the Australian domestic market occurs, lodgement is due on the next business day in the state where the return is prepared. [154]

6.4.3 WHAT MUST I DO TO DELIVER FUEL PRODUCTS INTO HOME CONSUMPTION?

Delivery under periodic settlement permission

If we provide you with a PSP, you must take the following steps to deliver excisable fuel products home consumption:

  1. deliver the fuel products into home consumption: (where delivered in accordance with the permission the products are now no longer subject to excise control)
  2. complete and submit your excise return in accordance with the timeframes in the permission, and
  3. pay the duty to us in accordance with the timeframes in the permission.

Delivery after prepaying the excise duty

If you do not have a PSP, you must take the following steps to deliver excisable fuel products home consumption:

  1. complete and submit your excise return
  2. pay the duty to us
  3. obtain a Delivery authority from us, and
  4. deliver the fuel products into home consumption.

6.4.4 HOW DO I LODGE EXCISE RETURNS AND PAY EXCISE DUTY?

To lodge your excise return (NAT 4285):

  • fax it to us on 1300 131 456 , or
  • post it to

    Australian Taxation Office
  • Excise Returns Processing Unit

    PO Box 3007

    PENRITH NSW 2740.

You can pay excise duties:

  • by electronic funds transfer, including direct credit and BPAY
  • in person at a Post Office, or
  • by mail (cheque or money order), The payment must be received by the day and time stated in your PSP.

If you are required to pay your other tax debts electronically, you must also make your payment for excise duty by electronic funds transfer.

We do not accept credit card payments.

If you pay the excise duty at a Post Office, you must use a payment advice. To obtain a payment advice booklet, phone us on 13 72 26 or 1800 815 886 and supply us with your Australian Business Number (or Excise Identification Number) and client account number.

 

Lodgment of an excise return and payment of any duty must be made by the day and time stated on your PSP. [155]

Failure to pay on time may result in the revocation of your PSP.

 

To obtain an excise return (NAT 4285):

  • visit our website at ato.gov.au , or
  • phone 1300 137 290.

For more information about completing your excise return refer to the Excise return instructions (NAT 15436).

6.4.5 WHAT DO I DO IF I HAVE MADE AN ERROR ON MY EXCISE RETURN?

You may correct errors in your excise return or add new lines by lodging an amending excise return and referencing the number of your original return.

If your amendment results in a shortfall in excise duty paid, you must pay the additional duty when you lodge the amending return.

If your amendment results in an overpayment of excise duty, you may apply for a refund or treat the amount as a credit and offset it against the duty you are liable to pay in your next excise return. In this situation, time limits may apply in which to lodge your amended return.

Time limits apply for making an application for a refund of excise duty. In most cases an application must be submitted within 12 months of the date on which the excise duty was paid.

An amending return can only be used to change product details.

If you wish to change other information in your original excise return (for example your individual details or the settlement period) you must lodge a new excise return form as the amending excise return form does not cater for changes to these sections. The new return must contain the amended details and refer to the original return. You should also request cancellation of the original return.

To obtain an Amending excise return (NAT 4286):

  • visit our website at ato.gov.au , or
  • phone 1300 137 290.

For more information about completing your Amending excise return refer to the

              Amending e xcise return instructions (NAT 15772).

 

6.4.6 WHAT DO I DO IF I NEED MORE INFORMATION?

If you need more information on payment of duty contact us as follows:

              Australian Taxation Office

              PO Box 3514

              ALBURY     NSW     2640

We will ordinarily respond to written information requests within 28 days. If we cannot respond within 28 days, we will contact you within 14 days to obtain more information or negotiate an extended response date.

6.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO PAYMENT OF DUTY?

The following are the penalties that may apply after conviction for an offence.

Move, alter or interfere

If you move, alter or interfere with excisable fuel products that are subject to excise control, without permission, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products. [156]

Deliver

If you deliver excisable fuel products into the Australian domestic market contrary to your permission, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products. [157]

Evade

If you evade payment of any duty which is payable, the maximum penalty is 5 times the amount of duty on the excisable fuel products, or where a court cannot determine the amount of that duty the penalty is a maximum of 500 penalty units . [158]

False or misleading statements

If you make a false or misleading statement, or an omission from a statement in respect of duty payable on particular goods, to us, a penalty not exceeding the sum of 50 penalty units and twice the amount of duty payable on those goods. [159]

6.6 TERMS USED

Excisable fuel products

Excisable goods are goods on which excise duty is imposed. Excise duty is imposed on goods that are manufactured or produced in Australia and listed in the Schedule to the Excise Tariff Act.

As these guidelines deal with fuel products, we have used the term excisable fuel products.

Excisable fuel products include:

  • petrol
  • diesel
  • renewable diesel
  • crude petroleum oil
  • condensate
  • heating oil
  • kerosene
  • fuel ethanol
  • biodiesel
  • compressed natural gas (CNG)
  • liquefied natural gas (LNG); and
  • liquefied petroleum gas (LPG).

Excise control

Goods are subject to excise control from the point of manufacture until they have been delivered into home consumption or for export.

Goods subject to excise control cannot be moved, altered or interfered with except as authorised by the Excise Act.

Excise return

An excise return [160] is the document that you use to advise us:

  • the volume or mass of excisable fuel products that you have delivered into home consumption during the period designated on your PSP, or
  • the volume or mass of excisable fuel products that you wish to deliver into home consumption following approval.

Home Consumption [161]

'Home consumption' is the term used in the Excise Act and this guide to describe when excisable fuel products are released into the Australian domestic market for consumption. The term used in the legislation is 'deliver for home consumption'.

Normally this will be by delivering the goods away from licensed premises but includes using those goods within the licensed premises (for example using fuel to run equipment in your licensed premises). It does not include goods delivered for export or the movement of goods underbond (see definition below) to another licensed site.

The term 'home consumption' is not defined in the Excise Act and there is no definitive case law that looks at the issue in question. However there are several cases where issues closely related to it are considered. [162]

The conclusion drawn from those cases is that 'home consumption' refers to the destination of goods as being within Australia as opposed to exporting them.

 

Penalty units

A penalty unit is specified in section 4AA of the Crimes Act 1914 and, at the time of writing, is $210.

Remission

A remission of excise duty extinguishes the liability for duty that was created at the point of manufacture, in prescribed circumstances.

For more information about remissions see Chapter 7 - Remissions, refunds, drawbacks and exemptions.

Underbond

This is an expression not found in excise legislation but it is widely used to describe goods that are subject to excise control. Excisable goods that are subject to excise control are commonly referred to as 'underbond goods' or as being 'underbond'. This includes goods that have not yet been delivered into home consumption and goods moving between premises under a movement permission.

 

6.7 LEGISLATION (quick reference guide)

In this chapter we have referred to the following legislation:

6.7.1 Excise Act 1901

Section 24 - Excisable goods and goods liable to duties of Customs may be used in manufacturing excisable goods

Section 58 - Entry for home consumption etc.

Section 59 - Payment of duty

Section 59A - Declared period quotas - effect on rates of Excise duty

Section 60 - Persons to keep excisable goods safely etc.

Section 61 - Control of excisable goods

Section 61C - Permission to deliver certain goods for home consumption without entry

Section 114 - Time for commencing action

Section 120 - Offences

Section 154 - Deposit of duty

Section 155 - Limited dispute rights because of objection against private ruling

Section 162C - Review of decisions

6.7.2 Excise Tariff Act 1921

Section 5 - Duties of excise

The Schedule

6.7.3 Crimes Act 1914

Section 4AA - Penalty units

6.7.4 Income Tax Assessment Act 1997

Section 328-110 - Meaning of small business entity

6.7.5 Taxation Administration Act 1953

Section 359-60 - Objections, review and appeals relating to private rulings

Excise guidelines for the fuel industry
  Date: Version:
  1 July 2006 Original document
  1 April 2015 Updated document
  12 July 2017 Updated document
You are here 11 December 2017 Updated document
  4 June 2021 Current document

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