Previously tax-free 'Alternative Fuels' will now be
subject to excise and custom duties after a series of Bills
amending the current legislation have received Royal Assent.
Liquefied petroleum gas (LPG), liquefied
natural gas (LNG) and compressed natural gas
(CNG) used for transport purposes will now be
subject to the tax which the Government has implemented as a means
of addressing perceived current distortions in the fuel market.
Aims of the Changes
The Government has created the amendments with an aim to:
Improve efficiency and effectiveness of the market by
addressing current taxing distortions.
Improve the use of fuel tax as a proxy for a road-user
Recognise the benefits that can flow from alternative
Provide certainty as to the future direction of the
Provide the industry with an appropriate transition period
Which acts are affected?
The following Acts are affected by the proposed amendments:
Taxation of Alternative Fuels Legislation Amendment Bill
Excise Tarriff Amendment (Taxation of Alternative Fuels)
Customs Tarriff Amendment (Taxation of Alternative Fuels)
Energy Grants (Cleaner Fuels) Scheme Amendment Bill
Why the change?
Historically, such fuels are considered more
'eco-friendly' and as such have remained tax-free to
increase their attractiveness to industry and consumers alike.
However, as new policies regarding the promotion of
'environmentally friendly' practices are introduced, the
Government no longer considers withholding of a tax on
'eco-friendly' fuels as important.
Furthermore, as fuel tax is considered a 'proxy'
road-user charge, the taxing of alternative fuels means the fuel
tax is more effective in reflecting the costs associated with road
use in general.
The potential environmental benefits of such fuels have not been
completely discounted by the scheme however. Although these fuels
will be taxed at a rate based on their energy content, a discount
of 50 per cent will be applied to this amount. Furthermore
automatic remissions schemes and entitlements to fuel tax credits
for LPG, LNG and CNG used in enterprise for off-road use will also
be made available.
The arrangements for Biodiesel and Renewable Diesel and ethanol
will also be extended under the Bills.
The scheme also incorporates the most recent review of the
International Harmonized Commodity Description and Coding System
into the Customs Tariff Act and provides rates of customs
duties for products produced overseas in accordance with relevant
Free Trade Agreements.
According to the Government, the estimated gain to the Budget
until 2015 is $518.5 million.
Transitional Periods for Industry
Under the scheme, manufacturers of alternative fuels will now
need to be licensed. However, these compliance costs will allegedly
be offset by simplification of excise requirements such as allowing
payment of fuel tax on a Business Activity Statement.
To allow unlicensed gaseous fuel manufacturers sufficient time
to obtain such licences, transitional provisions will be enacted
and the application of the taxes for LPG, LNG and CNG will be
phased in over the period 1 December 2011 to July 2015.
The amendments will apply to fuel manufactured or imported into
Australia on or after 1 December 2011, fuel imported before 2011
for which the rate of import duty is uncalculated and fuel which is
at a manufacturer's premise on 1 December 2011.
What should my business do to implement the changes?
The Government says the amendments to the current scheme aim to
ensure consistency in the taxation of fuels for transport purposes
and accordingly improve market efficiency, competition and the
consequential allocation of resources throughout the fuel market.
However, action is required to achieve such changes. As the Bill
has now received Royal Assent, swift commencement of preparations
by manufacturers, importers and the wider industry alike to
implement the changes are crucial.
With industry-leading expertise in Customs, Trade and Transport
Law Hunt & Hunt have the knowledge and the resources to assist
and advise your business with the seamless implementation of the
new laws with commercially viable outcomes and as ever, are happy
to assist with the transition.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Exemptions or concessions on stamp duty could apply when contemplating the purchase or transfer of NSW real estate.
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