ACIS Administration (Modulation) Guidelines 2006 Variation 2010 (No. 1)

Administered by Department of Industry, Science and Resources

Legislation au F2010L00786 Not in force Legislative Instrument

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EXPLANATORY STATEMENT
 

 

ACIS Administration (Modulation) Guidelines 2006 Variation 2010 (No.1)

 

General Outline

 

The ACIS Administration (Modulation) Guidelines 2006 (the Guidelines) are made under section 55 of the ACIS Administration Act 1999 (the ACIS Act) for Stage 2 of ACIS.  The Guidelines set out how the following kinds of credit are to be modulated:

  • unmodulated investment credit issued to motor vehicle producers (MVPs);
  • unmodulated investment credit issued to non-MVPs; and
  • unmodulated capped production credit.

 

The purpose of modulating the credit is to ensure that:

  • the cap for ACIS Stage 2 is not exceeded; and
  • in respect of any ACIS year, the 5% of sales limit on individual participants is not exceeded.

 

An ACIS Stage 2 modulation system to give effect to the Guidelines has been in place since 1 January 2006.  The Department of Innovation, Industry, Science and Research (DIISR) recently completed an internal review of the system’s efficiency and effectiveness.  This has resulted in the identification of both legislative and administrative improvements for the ACIS Stage 2 modulation system, notwithstanding the fact that Stage 2 will cease on 31 December 2010.  This variation will improve the effectiveness of the 2006 Guidelines. 

 

It provides that the Secretary, under the authority of subsection 68(5) of the ACIS Act, may revise the calculations used for determining the amount of duty credit a participant is entitled to receive where the information provided by a participant for these calculations may have been inaccurate or incomplete. 

 

This provision may only be used in circumstances where the rights of a participant are not disadvantaged.  This means that under section 33 of the Guidelines the Secretary may only make a positive adjustment to the ledger.  In addition, the Secretary must ensure that the value of duty credit arising from a revision must not exceed:

  • the ACIS Stage 2 cap
  • the 5 per cent of sales limit for a participant; and
  • the maximum entitlement available under the ACIS Act

 

The variation also changes the timing of the calculation of modulation rates in 2010 until after quarterly returns are made by participants.  This will ensure that actual data rather than forecasts is used in the modulation calculations for each quarter.  The value of the credit to be issued will be more accurate and improve the efficiency of the modulation system. This change may result in a delay in the issuing of duty credits to some participants by several weeks.  

 

The variation further corrects a number of provisions in the 2006 Guidelines that if left uncorrected could, unintentionally, operate in a manner that would be inconsistent with the operation of the ACIS Act.

 

Legislative Authority

 

Section 55 of the ACIS Act provides the authority for this variation.

 

Financial Implications

 

There are no financial implications arising from this variation.

 

Consultation

 

This variation has resulted from ongoing consultations with the following parties in respect of the operation of the Guidelines:

  • the DIISR program delivery arm, AusIndustry;
  • the Australian Government Solicitor;
  • Walter & Turnbull (consultants);
  • the Office of Legislative Drafting and Publishing; and
  • key representatives from the Australian automotive industry.


Notes on Sections included in the variation

 

Section 1: Name of Variation

 

This prescribes the name of the instrument as the ACIS Administration (Modulation) Guidelines 2006 Variation 2010 (No.1).

 

Section 2: Commencement

 

This provides for the instrument to commence on the day after it is registered in accordance with the Legislative Instruments Act 2003.

 

Section 3: Variation of ACIS Administration (Modulation) Guidelines (2006)

 

This is the formal provision that provides for the variation of the ACIS Administration (Modulation) Guidelines 2006 as outlined in Schedule 1.

 

Schedule 1 Variation

 

Part 6:  Correction of ledger

 

1.  Section 33: Correction of Ledger

 

This new Part provides for the Secretary to revise calculations for a participant relating to ACIS Stage 2.  In particular, it provides the authority for the Secretary to make positive adjustments to the ACIS ledger where information provided by the participant:

  •  may have been inaccurate or incomplete (including an overestimate or an underestimate); or
  •  relates to expected, estimated or forecast investment or production reflected in an entry in the ledger.

 

The revised calculations must ensure that:

  •  neither the ACIS stage 2 cap nor the 5% of sales limit for the participant's ACIS goods and services for the relevant ACIS year is exceeded (which may require that a revised modulation rate be calculated for MVPs or non-MVPs); and
  •  a participant's rights must not be affected so as to disadvantage that participant.

 

Part 7: Arrangements for ACIS year 2010

 

2. Section 34: Application

 

 This section provides that the operation of Part 7 only relates to ACIS year 2010.

 

3. Section 35: Interpretation

 

This section requires that reference to a modulation rate refers to a modulation rate worked out under section 16 or 17 (as the case requires) as modified by this Part.

 


4. Section 36: Calculations

 

This section requires that under Part 3, Division 2 of the Guidelines, the calculations are:

  •  to be based, where possible, on the most accurate information, including known values or amounts instead of estimates or forecasts; and
  •  To ensure that neither the ACIS Stage 2 cap nor the 5% of sales limit for the participant's ACIS goods and services for the ACIS year are exceeded.

 

5. Section 37: Timing: first second and third quarters ACIS year 2010

 

This section requires that:

  •  the MVP and non-MVP modulation rates for the first three quarters in 2010 are worked out as soon as practicable after the last day of a quarter in which a participant is permitted to make a return to ensure that the most up-to-date information is included in the calculation of the modulation rates; and
  •  the denominator of the MVP (subsection 11(8)) and non-MVP (subsection 12(8)) modulation formulas for total expected capped claims be limited for the 5% of sales limit in accordance with the operation of section 14.

 

6. Section 38: Timing: final quarter ACIS year 2010

 

This section requires that:

  •  the MVP and non-MVP modulation rates for the final quarter in 2010 is worked out as soon as practicable after the last day of a quarter in which a participant is permitted to make a return to ensure that the ACIS Stage 2 cap is not exceeded; and
  •  the denominator reference for the MVP (subsection 16(8)) and non-MVP (subsection 17(8)) modulation formulas for total expected capped claims be changed to "total capped credit".  Total capped claims in the calculation of the modulation rates for the final quarter are not limited for the 5% of sales limit or the ACIS Stage 2 cap may be exceeded.

 

7. Section 39: Provisions to be regarded as omitted

 

This section requires that a number of provisions do not apply in relation to ACIS year 2010, as they serve no function in the calculation of the MVP and non-MVP modulation rates, including:

 

  •  subsection 11(7) relating to the MVP modulation rate for a quarter (not including the final quarter);
  •  subsection 12(7) relating to the non-MVP modulation rate for a quarter (not including the final quarter;
  •  subsection 16(7) relating to the MVP modulation rate for the final quarter; and
  •  subsection 17(7) relating to the non-MVP modulation rate for the final quarter.

 

 The section also requires that section 19 does not apply in relation to the calculation of MVP and non-MVP modulation rates for the final quarter as its operation may result in the ACIS Stage 2 cap being exceeded.

 

This section further requires that Part 3, Division 3 and sections 29 to 31 do not operate in relation to ACIS year 2010.  The review of the ACIS modulation system has found that the ACIS Act does not provide for the calculation of modulation rates at a point in time for additional amounts of unmodulated credit.  Therefore these provisions serve no function.

Overview

The ACIS Administration (Modulation) Guidelines 2006 Variation 2010 (No.1), enacted to address inefficiencies and inaccuracies in the modulation system under the ACIS Administration Act 1999, was introduced by the Department of Innovation, Industry, Science and Research following an internal review. The variation seeks to improve the effectiveness of the modulation system, ensuring that the caps and limits set for ACIS Stage 2 are not exceeded and that the distribution of duty credits is accurate and fair. This legislative instrument allows for the Secretary to adjust calculations for duty credit entitlements when necessary, ensuring that any adjustments do not disadvantage participants. Furthermore, the variation modifies the timing of modulation rate calculations for 2010 to ensure that the most accurate data is used, potentially causing a slight delay in the issuance of duty credits. The variation also rectifies certain provisions in the 2006 Guidelines that could have operated inconsistently with the ACIS Act. There are no financial implications associated with this variation, which has been developed through consultations with relevant industry stakeholders.

Scope and Application

The ACIS Administration (Modulation) Guidelines 2006 Variation 2010 (No.1) applies to the modulation of unmodulated investment credit issued to motor vehicle producers and non-motor vehicle producers, as well as unmodulated capped production credit, under the ACIS Administration Act 1999. This variation is designed to enhance the efficiency and effectiveness of the modulation system, ensuring that the Stage 2 cap and the 5% of sales limit on individual participants are not exceeded for any given ACIS year. The variation allows for the revision of calculations used to determine duty credit entitlements where the initial information provided by a participant may have been inaccurate or incomplete, provided that such adjustments do not disadvantage the participant. Moreover, this variation introduces modifications to the timing of modulation rate calculations for the year 2010, ensuring that actual data rather than forecasts are used, which will lead to more accurate credit values and improved system efficiency, albeit with potential delays in credit issuance. This legislative instrument is applicable nationally, operating within the framework of the Commonwealth of Australia. The variation further rectifies several provisions within the 2006 Guidelines that could otherwise operate inconsistently with the ACIS Act. The variation does not impose any financial implications and has been developed through consultations with various stakeholders, including the Department of Innovation, Industry, Science and Research, AusIndustry, the Australian Government Solicitor, Walter & Turnbull, the Office of Legislative Drafting and Publishing, and key representatives from the Australian automotive industry. This variation is effective from the day after its registration under the Legislative Instruments Act 2003 and provides specific amendments and clarifications for the ACIS year 2010, ensuring alignment with the ACIS Act and the intended objectives of the modulation system.

Key Provisions

The ACIS Administration (Modulation) Guidelines 2006 Variation 2010 (No. 1) makes several important changes to the ACIS Administration (Modulation) Guidelines 2006, which are made under section 55 of the ACIS Administration Act 1999. This variation primarily addresses the calculation and issuance of duty credits to ensure that the cap for ACIS Stage 2 is not exceeded and that the 5% of sales limit on individual participants is not exceeded. The variation introduces mechanisms for correcting ledger entries based on potentially inaccurate or incomplete information provided by participants (section 33). It also changes the timing of the calculation of modulation rates for 2010 to ensure that actual data is used rather than forecasts (section 36). Moreover, it modifies the application of certain provisions to avoid exceeding the ACIS Stage 2 cap or the 5% of sales limit (sections 37 and 38). The variation imposes several obligations on parties and entities governed by the ACIS Act. The Secretary is authorised to revise calculations for participants where the information provided may have been inaccurate or incomplete, ensuring that neither the ACIS Stage 2 cap nor the 5% of sales limit is exceeded. This revision must be made in a way that does not disadvantage the participant (section 33). For the 2010 ACIS year, calculations must be based on the most accurate information available and must be made after quarterly returns are submitted to ensure the most up-to-date data is used (sections 36 and 37). Additionally, certain provisions are deemed omitted for the 2010 ACIS year, as they do not serve a function in the calculation of modulation rates (section 39). The variation does not introduce new offences or penalties. Instead, it focuses on ensuring the correct application of the ACIS modulation system to avoid exceeding caps and limits. However, any failure to comply with the provisions of the ACIS Act or the Guidelines could result in legal consequences. For example, providing inaccurate or incomplete information could lead to adjustments to the ledger entries, potentially impacting the duty credits issued to participants. Furthermore, if the caps or limits are exceeded due to non-compliance, it could result in the affected duty credits being adjusted or clawed back, potentially leading to financial penalties or other repercussions for the participants. In conclusion, the ACIS Administration (Modulation) Guidelines 2006 Variation 2010 (No. 1) provides mechanisms for correcting ledger entries and adjusting the timing of modulation rate calculations to ensure the effective operation of the ACIS Stage 2 modulation system. It imposes obligations on the Secretary to make positive adjustments to the ledger and on participants to provide accurate and complete information. While it does not introduce new offences or penalties, non-compliance with the Guidelines could lead to adjustments in duty credits and potential financial repercussions for participants.

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