ATO Interpretative Decision
ATO ID 2005/14 (Withdrawn)
Excise
Product Stewardship Oil: what is re-refining?FOI status: may be released
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This ATO ID is withdrawn as it is a simple restatement of the law and does not contain an interpretative decision.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
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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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 base oil that undergoes sophisticated processes that remove impurities and return the oil to its former state 're-refined base oil' for the purposes of the table in subregulation 4(1) of the Product Stewardship (Oil) Regulations 2000 (the Regulations)?
Decision
Yes. Used base oil that undergoes sophisticated processes that remove purities and return the oil to its former state is 're-refined base oil' for the purposes of the table in subregulation 4(1) of the Regulations.
Facts
An entity treats used transformer oil by removing contaminants from the used oil. The treatment involves several separate processes which result in the oil meeting the specifications of new oil.
After processing, the oil is returned to industry in an 'as new' condition for use in its original application.
Reasons for Decision
Under subsection 9(1) of the Product Stewardship (Oil) Act 2000 (the PSO Act), an entity is entitled to a product stewardship (oil) benefit for the sale or consumption of recycled oil that they have recycled in Australia.
The amount of benefit payable for certain types of products is specified in the table at subregulation 4(1) of the Regulations. The term 're-refined' is mentioned in the table at subregulation 4(1) of the Regulations at the following items:
- 1
- Re-refined base oil (for use as a lubricant or a hydraulic or transformer oil) that meets the criteria mentioned in Schedule 1
- 2
- Other re-refined base oils
- 7
- Industrial process oils and lubricants, including hydraulic and transformer oils (re-processed or filtered, but not re-refined)
The term 're-refined' is not defined in the legislation. The ordinary meaning of 'refine' as a verb is given by The Macquarie Dictionary, 2001, rev. 3rd edn, The Macquarie Library Pty Ltd, NSW as ' 1 . to bring to a fine or a pure state, free from impurities: to refine metal, sugar, petroleum, etc'. Therefore, using this definition, the re-refining of oil is to restore the oil to its former state by the removal of impurities.
However, it may be argued that the re-processing of oils may produce the same result as the re-refining of oils. Therefore it is necessary to differentiate between the 'reprocessing' of oils and the 're-refining' of oils. Where oils are recycled using simple physical processes such as the operation of an oil filter in an engine, this would be considered to be re-processing. In contrast, the removal of contaminants from transformer oil, by a sophisticated process involving a chemical reaction, is considered to be 're-refining'. Whether, in a given case, a particular recycling activity constitutes 're-refining' will depend on the facts of the case.
Conclusion
Used base oil that has been subjected to sophisticated processes that remove impurities and restore the oil to its former state has been re-refined for the purposes of the table in subregulation 4(1) of the Regulations.
Date of decision: 10 December 2004
Legislative References:
Product Stewardship (Oil) Act 2000
subsection 9(1)
subregulation 4(1)
Other References:
Macquarie Dictionary 2001, rev. 3rd edn, The Macquarie Library Pty Ltd, NSW
Keywords
Product stewardship oil scheme
PSO base oil
PSO recycling
PSO re-refining
ISSN: 1445-2782
| Date: | Version: | |
| 10 December 2004 | Original statement | |
| You are here | 28 March 2008 | Archived |
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