ATO Interpretative Decision

ATO ID 2006/193 (Withdrawn)

Excise

• This ATO ID is withdrawn because it does not include an interpretative decision.
  This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Is an entity eligible for a grant under Part 2 of the Energy Grants (Cleaner Fuels) Scheme Act 2004 (EGCFS Act) for the manufacture of a fuel that is a blend of diesel and biodiesel where the entity manufactured the biodiesel but acquired the diesel from another source?

Decision

Yes. Where an entity manufactures a fuel that is a blend of biodiesel and diesel, and the entity manufactured the biodiesel but acquired the diesel from another source, the entity is eligible for a grant under Part 2 of the EGCFS Act.

Facts

The entity is registered for a cleaner fuel grant under section 9 of the Product Grants and Benefits Administration Act 2000.

The entity is licensed to manufacture biodiesel and to blend biodiesel with diesel.

The entity purchases diesel on which excise duty has been paid.

The entity blends the biodiesel it has manufactured with diesel.

Prior to blending, the entity did not enter the biodiesel and thus did not pay excise duty on it.

After blending, the entity enters the blended fuel and pays excise duty at the appropriate rate.

The entity wishes to claim the cleaner fuels grant to offset the excise duty which it has paid.

Reasons for Decision

Under the cleaner fuels grant scheme an entity may be entitled to a grant for an amount of cleaner fuel that it manufactures.

A 'cleaner fuel', for the purposes of the scheme, is relevantly defined in subsection 4(1) of the EGCFS Act as 'a fuel (including a fuel blend), prescribed by the regulations, that complies with each applicable fuel standard for such fuel'.

A 'biodiesel blend' is prescribed in regulation 4 of the Energy Grants (Cleaner Fuels) Scheme Regulations 2004 (EGCFS Regulations).

The definition of a 'biodiesel blend' is stated in regulation 3 of the EGCFS Regulations as meaning a fuel:

(a)

for use in an internal combustion engine; and

(b)

that is a blend, in any proportion, of:

(i)

biodiesel; and

(ii)

diesel that, if used as automotive diesel, would comply with the applicable fuel standard for automotive diesel.

The applicable fuel standard for automotive diesel is contained in the Fuel Standard (Automotive Diesel) Determination 2001 issued under section 21 of the Fuel Quality Standards Act 2000.

The term 'biodiesel' is also defined in subsection 4(1) of the EGCFS Act:

biodiesel means fuel:

(a)

for use in an internal combustion engine; and

(b)

manufactured by chemically altering vegetable oils or animal fats (including recycled oils from these sources) to form mono-alkyl esters;

that complies with the applicable fuel standard for such fuel.

The applicable fuel standard for biodiesel is contained in the Fuel Standard (Biodiesel) Determination 2003 issued under section 21 of the Fuel Quality Standards Act.

Consequently, for a blend of biodiesel and diesel to be eligible, the biodiesel blend must meet the following criteria:

(a)

the fuel must be manufactured for use in an internal combustion engine

(b)

the biodiesel component must meet the fuel standard for biodiesel, and

(c)

the diesel component must meet the fuel standard for automotive diesel.

The statutory definition of 'biodiesel blend' does not disqualify a biodiesel blend on the basis that the diesel component was manufactured by a person other than the entity who manufactured the biodiesel.

Legislative References:
Energy Grants (Cleaner Fuels) Scheme Act 2004
   subsection 4(1)

Other References:
Fuel Standard (Biodiesel) Determination 2003
Fuel Standard (Automotive Diesel) Determination 2001

Keywords
Fuel
Fuel blending
Diesel

Business Line:  Indirect Tax

Date of publication:  4 August 2006

ISSN: 1445-2782