Excise guidelines for the fuel industry

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01 INTRODUCTION

OUR COMMITMENT TO YOU The information in this publication is current at May 2009. This publication is an expression of the Commissioner's opinion on the operation of fuel excise legislation. This publication is not legally or administratively binding on the Commissioner and is not a 'public ruling' for the purposes of Section 105-60 or Division 358 of Schedule 1 to the Taxation Administration Act 1953. The law does not provide for legally binding rulings on fuel excise legislation. If you feel this publication does not fully cover your circumstances, please seek help from the Tax Office or a professional adviser. Since we regularly revise our publications to take account of any changes to the law, you should make sure this edition is the latest. The easiest way to do this is by checking for a more recent version on our website at www.ato.gov.au

1.1 PURPOSE

1.2 WHAT IS EXCISE?

1.3 OVERVIEW OF EXCISE LEGISLATION

1.3.1 Excise Tariff Act

1.3.2 Excise Act

1.3.3 Excise Regulations

1.4 WHO ADMINISTERS EXCISE?

1.5 WHEN AM I INVOLVED IN THE EXCISE SYSTEM?

1.6 WHAT DO I DO IF I NEED MORE INFORMATION?

1.7 TERMS USED

1.8 LEGISLATION (quick reference guide)

1.8.1 Excise Act 1901

1.8.2 Excise Tariff Act 1921

1.8.3 Commonwealth of Australia Constitution

1.1 PURPOSE

This chapter deals with:
  • what excise is
  • an overview of excise legislation relevant to fuel
  • who administers Excise, and
  • when you are involved in the excise system.
It provides a general introduction to excise as it relates to fuel products . Further detail on the matters discussed is contained in later chapters.

1.2 WHAT IS EXCISE?

The Commonwealth of Australia Constitution Act (the Constitution) provides that only the Commonwealth can impose duties of excise. [1] The Constitution also provides that laws imposing taxation (and excise is a tax) shall only deal with the imposition of tax. The Excise Tariff Act 1921 (Excise Tariff Act) imposes excise on relevant goods manufactured or produced in Australia and the Excise Act 1901 deals with administrative arrangements applying to the excise system. In Ha & Anor v. State Of New South Wales & Ors; Walter Hammond & Associates Pty Limited v. State Of New South Wales & Ors [2] (Ha), the High Court explained a duty of excise as follows: "... duties of excise are taxes on the production, manufacture, sale or distribution of goods, whether of foreign or domestic origin. Duties of excise are inland taxes in contradistinction from duties of customs which are taxes on the importation of goods." [3] Excise imposed by the Excise Tariff Act is imposed on goods dutiable under the Schedule to that Act and manufactured or produced in Australia. It can be seen that this clearly fits the definition of duty of excise as described by the High Court in the Ha case.

1.3 OVERVIEW OF EXCISE LEGISLATION

The principal legislative framework for the excise system, relating to fuel, is contained in the:
  • Excise Tariff Act 1921 (Excise Tariff Act)
  • Excise Act 1901 (Excise Act), and
  • Excise Regulations 1925 (Excise Regulations).
To change the Excise Tariff Act requires an amending act to be passed through parliament. There are parliamentary procedures which allow for the modification of the Excise Tariff so that the changes can be implemented immediately. These procedures are known as Tariff Proposals.

  For more information on Tariff Proposals see Section 1.3.1 - Excise Tariff Act.

1.3.1 Excise Tariff Act

There are three key provisions in the Excise Tariff Act that operate to:
  • impose excise duty
  • identify excisable goods and the applicable duty rates (the Schedule), and
  • index the duty rate.
Imposition of Excise Duty Section 5 of the Excise Tariff Act imposes excise duty on goods that are listed in the Schedule to the Act and manufactured or produced in Australia. Excise duty is imposed at the time of manufacture or production of the relevant goods. The Schedule lists the various goods that are subject to excise and the rate of duty applicable. It is sometimes referred to as the Excise Tariff. The schedule of excisable goods and the duty rates The Schedule to the Excise Tariff Act is a table that lists the goods that are subject to excise duty (if those goods are manufactured or produced in Australia). The goods that are currently subject to excise fall within three broad groups:
  • alcoholic beverages (other than wine) and spirits
  • cigarettes and other tobacco products, and
  • fuel and oils.
Within those three broad groups the schedule provides eight different items and those items are (in most cases) further broken down into subitems. The table contains a description of the items and subitems and provides the rate of duty applicable to them. The following is an extract from the fuel products section of the table:
Excise duties
ItemSubitemDescription of goodsRate of Duty
10  Goods as follows: ... (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; ... (f) biodiesel ... 
  10.5 Gasoline (other than for use as fuel in aircraft) $0.38143* per litre
  10.6 Gasoline for use as fuel in aircraft $0.02854* per litre
  10.10 Diesel (other than biodiesel) $0.38143* per litre
  10.21 Biodiesel $0.38143* per litre
* Rate of duty as at 1 May 2009. For the current rates of duty, refer to the Schedule under Excise Tariff Working Pages on our website at www.ato.gov.au This manual does not cover stabilised crude petroleum oil or condensate classified to items 20 and 21 respectively in the Schedule of the Excise Tariff Act 1921. Changes to the treatment of stabilised crude petroleum oil and condensate were made in 2008 This guide does not address those changes. Indexation of the duty rate The rates of excise are set out in the Schedule to the Excise Tariff Act. However, section 6A provides that the rates of duty may increase every six months (generally 1 February and 1 August). The amount of any increase is calculated by reference to the All Groups Consumer Price Index published quarterly by the Australian Bureau of Statistics. These increases are commonly referred to as indexation. We publish these in the Commonwealth Gazette and, for ease of reference, we provide a 'working tariff' which shows an up to date rate taking account of the indexation increases. Indexation increases also apply to rates set under a tariff proposal.
  The rates of duty for fuel products are currently fixed and are not indexed in accordance with increases in the CPI in the same way as alcohol and tobacco.
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) so that it is effective from the time it is proposed rather than after the enactment of an Excise Tariff Amendment Act. Most of the processes relate to Parliamentary procedures, however, there are specific provisions in the Excise Act that provide for the making of 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. We then apply the proposal as if it is law.   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. [4] 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 to you.

1.3.2 Excise Act

The Excise Act imposes controls in two main areas:
  • manufacture, storage and movement of excisable fuel products, and
  • payment of duty for excisable fuel products.
The Excise Act requires that fuel not be manufactured outside our control. This is to ensure that the correct amount of duty is ultimately paid or the fuel is otherwise satisfactorily dealt with. This is achieved by making various activities unlawful and allowing us to grant licences and permission to people to carry on those otherwise unlawful activities. Manufacture, storage and movement of excisable fuel products Before you can manufacture fuel products you need a manufacturer licence granted under the Excise Act. [5] Before you can store excisable fuel products that you did not manufacture you need a storage licence granted under the Excise Act. [6] Before you can remove excisable fuel products on which duty has not been paid, you need permission granted under the Excise Act. [7] Generally speaking we will not grant permission to move excisable fuel products on which duty has not been paid to a place that is not covered by either a manufacturer licence or a storage licence.

  For more information about the excise licensing regime, refer to Chapter 2 - Licensing: Applications.

  For more information about movement permissions, refer to Chapter 5 - Movement permissions.
Payment of duty for excisable fuel products The Excise Tariff Act imposes duty when excisable fuel products are manufactured. The Excise Act specifies when the duty must be paid, how and what you must report to us, the relevant time to determine the rate of duty in force, and provides a mechanism to require payment where duty has not been correctly accounted for on excisable fuel products.   In general terms, duty must be paid on the goods before they are delivered from licensed premises (other than being delivered to another licensed premises). Permission may be granted to deliver the goods prior to paying the duty.

  For more information about payment of duty refer to Chapter 6 - Payment of duty.

1.3.3 Excise Regulations

The Excise Regulations set out provisions in relation to excisable goods such as:
  • refunds and remissions, and
  • drawbacks.

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

1.4 WHO ADMINISTERS EXCISE?

The Commissioner of Taxation has the general administration of the Excise Act and the Excise Tariff Act. [8] This means you have to deal with the Tax Office for Australian manufactured fuel products. As excise is only levied on products manufactured in Australia, imported fuel products are not subject to control by us. Customs duty, under the Customs Act 1901 (Customs Act) and Customs Tariff Act 1995 (Customs Tariff Act), is applied to imported fuel products. The Australian Customs Service is responsible for administration of the Customs Act and Customs Tariff Act. Who you need to deal with is summarised in the following table.
  Customs Tax Office
Australian manufactured fuel products   No Yes
Imported fuel products not for further manufacture in Australia   Yes No
Imported fuel products for further manufacture in Australia   Yes Yes

1.5 WHEN AM I INVOLVED IN THE EXCISE SYSTEM?

You are involved in the excise system if you:
  • manufacture fuel products (excisable goods), or
  • store or own fuel products on which duty has not been paid.

1.6 WHAT DO I DO IF I NEED MORE INFORMATION?

If you need more information on excise, as it relates to fuel, contact us:
  • phone 1300 137 292
  • fax (03) 9285 1168 , or
  • write to us at

    Australian Taxation Office

    PO Box 3001

    PENRITH NSW 2740
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.  

1.7 TERMS USED

Excisable fuel products Excisable goods are goods on which excise duty is imposed. Excise duty is imposed on goods that are listed in the Schedule to the Excise Tariff Act and manufactured or produced in Australia. As these guidelines deal with fuel products, we have used the term excisable fuel products. Excisable fuel products include:
  • petrol
  • diesel
  • crude petroleum oil
  • heating oil
  • kerosene
  • fuel ethanol, and
  • biodiesel.
This manual does not cover stabilised crude petroleum oil or condensate classified to items 20 and 21 respectively in the Schedule of the Excise Tariff Act 1921.

1.8 LEGISLATION (quick reference guide)

In this chapter, we have referred to the following legislation:

1.8.1 Excise Act 1901

Section 4 - Definitions Section 7 - General administration of Act Section 25 - Only licensed manufacturers to manufacture excisable goods Part IV - Manufacture, storage, producer and dealer licences Section 61A - Permission to remove goods that are subject to CEO's control Section 114 - Time for commencing action

1.8.2 Excise Tariff Act 1921

Section 1A - General administration of Act Section 5 - Duties of excise Section 6A - Indexation of rates of duty The Schedule

1.8.3 Commonwealth of Australia Constitution

Section 90 - Exclusive power over customs, excise, and bounties
Excise guidelines for the fuel industry
  Date: Version:
You are here 1 July 2006 Original document
  1 April 2015 Updated document
  12 July 2017 Updated document
  11 December 2017 Updated document
  4 June 2021 Current document

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